The Department for Business and Trade has launched a consultation on reforms in the Employment Rights Bill to strengthen remedies in the employment tribunal on collective redundancy, and fire and rehire.
It is one of four consultations launched yesterday as the Bill had its second reading in the House of Commons.
The Employment Rights Bill includes important changes to the law on dismissal and re-engagement, often referred to as fire and rehire, making it an automatically unfair dismissal unless the business is in significant financial difficulty.
It also changes current rules surrounding collective redundancy such that, when considering thresholds for collective consultation, an “establishment” comprises the whole business and not individual sites or branches.
The consultation, which closes on 2 December 2024, focuses on the remedies an employee could receive when faced with abuses of fire and rehire and collective redundancy rules. The proposals apply to England, Scotland and Wales.
In his foreword to the consultation, Justin Madders, minister for employment rights, outlined that the UK is ranked well below the OECD average on the strictness of employment protections on individual and collective dismissals.
He also cited a TUC survey in 2021 which revealed that nearly one in 10 workers had been told to reapply for their jobs on worse terms and conditions or face dismissal.
“Consultation periods exist as a way for employers and employees to collaborate on avoiding redundancies, such as discussing relocation or changing roles within the business,” said Madders.
“Let me be clear – most employers do exactly that. Most employers do their best to ensure that they are going through the process properly and reach or exceed the standard expected.
“However, there are employers, who are choosing to ignore their statutory obligations. Instead, they are offering their employees more money than an employment tribunal can award so that said employees will accept unlawful dismissal through individual settlement agreements. We cannot let employers believe that they can essentially outbid the law and pay their way out of their obligations.”
Fire and rehire
Clause 22 of the Employment Rights Bill would ensure that employers can only use the practice of fire and rehire if they can demonstrate their financial viability was under threat, and that changing the employee’s contract was unavoidable – it was the only way to prevent insolvency.
The employment tribunal would be required to consider whether the employer consulted with employees and unions when deciding if the dismissal was fair.
This measure means employers will not be able to use the practice as an intimidation technique towards employees to make them change to unfavourable contacts or be replaced by new employees on less favourable contracts.
The government consultation is seeking views on whether interim relief should be available to employees bringing an unfair dismissal claim under the new right.
An award of interim relief would mean that the employee would continue to be paid, pending the final hearing, but it would only be awarded where the employee can show it is “likely” that their unfair dismissal claim would succeed.
Collective redundancy
For collective redundancy, the government is seeking views on the proposal to increase the maximum period of the protective award that an employment tribunal can award.
Currently, where an employer is proposing to make 20 or more employees redundant from one establishment in a 90-day period, the collective consultation must begin:
- at least 45 days before the first dismissal for 100 or more proposed redundancies
- or at least 30 days before the first dismissal for 20-99 proposed redundancies.
Where employers do not comply, the employment tribunal can make a protective award of up to 90 days’ pay to each affected employee.
The consultation is considering two options:
- To double the protective award that a tribunal can award from 90 to 180 days
- Or to remove the cap on the protective award entirely.
The government is also seeking views on whether interim relief should be available to employees who bring claims for the protective award.
The government intends to gather further views on strengthening the collective redundancy framework in 2025, including consulting on doubling the minimum consultation period when an employer is proposing to dismiss 100 or more employees from 45 to 90 days.
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