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Written Ministerial Statements

Written Ministerial Statements


BIS: Govt response on changes to the rules on collective redundancies

As part of the Government’s ongoing review of employment law, and in response to the Red Tape Challenge, I have published today the Government response to the consultation on changes to the rules on collective redundancy. This sets out the Government’s decision to introduce legislative reform to those rules and new guidance by April 2013.

Consultation on the collective redundancy rules concluded on 19 September 2012 having sought views on a package to encourage better quality consultation in large-scale redundancies. We received 160 responses and held a number of focus groups. Consultees confirmed difficulties with the current rules that undermine the effectiveness of collective redundancy consultation and the ability of employers to restructure efficiently in response to market pressures.

The Government has concluded that a strong case has been made for a combination of legislative change and new guidance. We have decided to introduce a statutory change to reduce the current 90-day minimum period before very large redundancies can take place to 45 days. This change will allow businesses to restructure more effectively, and give them flexibility to respond to changing market conditions. But the 45 days will be a minimum consultation period. We received plenty of evidence to show that consultations can and do last longer than the minimum period and we expect that to continue where circumstances make this desirable.

We have also decided to legislate to exclude fixed term contracts which have reached their agreed termination point from collective redundancy consultation obligations. The consultation demonstrated that employers, particularly in Higher Education Institutes, struggle with existing uncertainty around whether the natural ending of fixed-term contracts triggers a requirement for collective redundancy consultation.

Legislative change will be through secondary legislation, subject to the affirmative resolution procedure. In addition, Acas will produce non-statutory guidance that addresses key contentious issues raised during consultation. The aim will be to promote good quality consultation and engagement between employers and employees.

I believe these reforms of the collective redundancy rules will strike an appropriate balance between ensuring employees are engaged in decisions about their future and allowing employers greater certainty and flexibility to take necessary steps to restructure.

Copies of the Government response have been placed in the Libraries of both Houses.