Employment Rights Bill – Changes to collective redundancy provisions

The current legal position on collective redundancy

1. When an employer proposes to make 20 or more employees redundant, at any one establishment, within 90 days, then there’s an obligation to collectively consult with appropriate representatives.
2. The length of consultation depends on the number of redundancies being made (at least 30 days for 20-99 redundancies, and at least 45 days for 100+ redundancies)
   
   However, the meaning of the term ‘establishment’ has been the subject of several significant cases, the most well-known being USDAW v WW Realisation (1) Limited and Ethel Austin, better known as the ‘Woolworths case’.
   USDAW v WW Realisation (1) Limited and Ethel Austin
3. In this case, the European Court of Justice looked at the question of whether each Woolworths branch was a separate ‘establishment’ or whether the business should be looked at as a whole. It decided that each branch could be treated as a separate establishment which meant that, as most branches had fewer than 20 employees, there was no obligation to collectively consult. If an employer breaches its collective consultation obligations, employees (or their representatives) can bring a claim for a protective award of up to 90 days gross pay (uncapped).

Change under the Employment Rights Bill

This all looks increasingly likely to change under the Employment Rights Bill, which is currently being debated in the House of Lords. The Government recently published its response to its consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire.

Key changes:

• Cap on protective awards in collective redundancy situations to increase from 90 days to 180 days to encourage employer compliance.
• A proposal that interim relief should be available in claims for protective awards and/or claims for unfair dismissal on grounds of fire and re-hire (which are to be introduced in the Employment Rights Bill) will not be taken forward. The government acknowledged that this would place undue burdens on businesses and tribunals.
• When the Employment Rights Bill was first published, it included a proposal to remove the concept of ‘establishment’ from the definition of collective redundancy, meaning that there would be collective consultation whenever the total number of redundancies across a business was 20 or more, even if each site was making fewer than 20 redundancies.

The proposal to remove ‘any one establishment’ from collective redundancy rules has been changed. The revised plan reinstates the ‘one establishment’ concept but allows regulations to set an alternative threshold for collective consultation to bite when redundancies occur across multiple sites. The alternative threshold is likely to be based on redundancies across the business as a whole and could be a percentage, or a higher number than 20. We will have to wait for regulations to know what this number (and/or percentage) will be.