Collective redundancy reforms could saddle firms with ‘perpetual’ bureaucracy
The government has been warned against law changes on collective redundancy which businesses say could swamp bosses in more costs and bureaucracy.
As part of Labour’s Employment Rights Act, the government is set to require businesses to undertake a consultation of the entire firm whenever they make a certain number of redundancies.
Under existing rules, businesses are only required to launch consultations at the specific site where redundancies are made, if 20 or more staff are sacked within a 90-day period.
But business leaders have warned that organisation-wide redundancy consultations could prove costly and time consuming and are likely to be triggered frequently, leaving firms in a state of “perpetual consultation”.
The government has been considering the number of redundancies at which it will set its threshold, in a review which closed last week.
A threshold of anywhere between 250 and 1,000 redundancies is on the table, as well as a percentage-based approach linked to employer size.
It is understood that a number of major retailers submitted to the government’s review, sharing their concerns that a low threshold could lead to huge costs and complex bureaucracy.
Firms warn of ‘unnecessary bureaucracy’
The British Retail Consortium (BRC), an industry trade body, told Morning Wire that redundancies are “unavoidable” in the retail industry, which is the UK’s biggest private sector employer.
Employers already go beyond their legal obligations to engage directly with employees and consult at individual and site levels when making redundancies, the BRC said.
Helen Dickinson, the BRC’s chief executive, said: “When consultation is triggered across separate parts of a national business, it can create anxiety and uncertainty for employees whose roles are not at risk.
“A fixed threshold of 1,000 redundancies would help keep consultation focused on meaningful engagement with employees, rather than creating unnecessary bureaucracy that diverts time and resources away from local and individual support.”
The Confederation of British Industry (CBI), the UK’s leading industry group, also urged the government to make the threshold for consultation as high as possible.
‘Perpetual collective consultation’
Matthew Percival, the CBI’s work and skills director, told Morning Wire: “Proposals to change redundancy rules risk piling extra cost and complexity onto businesses at an already difficult time.
“If designed the wrong way, they could put large businesses in a costly state of perpetual collective consultation, thereby undermining the value of the process and making it harder for firms to invest, grow and create jobs.”
A government spokesperson said: “It’s only right that workers have a voice in redundancy processes. However, under current rules some employees do not.
“We are currently examining the responses and detail to change this and thank everyone who has responded to our consultation. This will help employers retain skilled workers and reduce the risk of costly disputes.”
The government has recently faced pressure over its incoming guaranteed hours rules, which are also a part of its employment rights reforms.
Labour was told by leading industry bodies last month that it risks spiking unemployment and blocking young peoples’ routes into work if it cracks down on zero-hour contracts.