Update to the Code of Practice on Dismissal and Re-engagement
When the Code of Practice on Dismissal and Re-engagement came into force last year, it omitted protective awards from the list of claims to which uplifts could be applied for non-compliance.
The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 has added failure to follow collective consultation requirements, to the list of claims where an adjustment of up to 25% can be made for failure to follow a relevant code of practice. The Order came into force on 20 January 2025.
What are protective awards?
Protective awards are awards of (currently) up to 90 days’ gross pay (uncapped) which can be made by tribunals where an employer has failed to comply with its collective consultation obligations. They only apply to redundancy situations involving 20 or more employees at any establishment.
What does this mean for employers?
The upshot of this change for employers is that ‘90 days gross pay’ per employee will no longer be the worst-case scenario. The likelihood that the statutory code of practice on dismissal and re-engagement has also been breached will also need to be considered – potentially adding up to 25% to the previous worst-case scenario figures.
This change also needs to be placed in context of the other changes which the government are proposing in this area. The Employment Rights Bill proposes to increase the number of redundancy situations under the umbrella of collective consultation by removing the concept of ‘establishment’. This means that the number of proposed redundancies must be calculated across the business rather than on a site-by-site basis, when more than 20 redundancies are proposed.
More challenges ahead as protective awards increase
The government has also recently completed a public consultation seeking views on increasing the level of protective awards, either to 180 days or by removing the cap on the protective award entirely. The stakes on collective consultation are getting higher and are likely to rise further in the coming months and years.
Further reading
- Code of Practice on Dismissal and Re-engagement
- Trade Union and Labour Relations (Consolidation) Act 1992
- The Code of Practice (Dismissal and Re-engagement) Order 2024
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