- Currently, employees have the right to a protective award of up to 90 days’ pay if their employer fails to adhere to the mandated collective information and consultation processes while planning to enact redundancies for over 20 employees at a single establishment within any given 90-day timeframe. However, an amendment under the Employment Rights Bill aims to refine this collective redundancy framework by eliminating the reference to establishments, allowing redundancies to be assessed based on the overall number of layoffs by the employer across all establishments, thereby simplifying the process and enhancing employee protections.
- The ongoing consultation invites feedback on two distinct options regarding the protective award that can be levied by a tribunal: one proposal is to enhance the maximum protective award from 90 days’ pay to 180 days’ pay, while the alternative suggests completely abolishing the protective award cap, thereby giving tribunals full discretion in determining the appropriate penalty based on individual cases.
- Interim relief provides a temporary remedy by which an employment tribunal can mandate the employer to either reinstate the claimant or, if reinstatement is not feasible, to maintain the claimant’s salary and benefits pending a comprehensive hearing. Nevertheless, this form of relief is restricted to specific instances of unfair dismissal claims.
- The government is probing public opinion on the potential extension of interim relief to employees who file protective award claims, as well as to those who allege unfair dismissal resulting from fire and rehire practices, as stipulated under the forthcoming Employment Rights Bill, which is still subject to Parliamentary approval.
- The consultation process will come to a close on December 2, 2024, with intentions to implement the changes via a government amendment to the Employment Rights Bill. Moreover, the government has earmarked 2025 for an additional round of consultation aimed at further fortifying the collective redundancy framework, potentially reviewing current practices and regulations.
- For those seeking detailed information on the core components of the Employment Rights Bill, additional resources are available for review.
- If you require clarification or wish to understand the implications of these changes for your business, please reach out to your designated Baker McKenzie representative for assistance.
Protective awards for failure to collectively inform and consult
Employers intending to dismiss 20 or more employees within a single establishment in a 90-day timeframe are legally obligated to engage in consultations with the representatives of the impacted employees, with the consultation period spanning a mandatory minimum of 30 to 45 days, contingent on the redundancy numbers. If an employer neglects this duty and fails to initiate adequate consultations, an employment tribunal may impose a protective award of up to 90 days’ pay to the affected employees. The tribunal is tasked with determining what constitutes a fair and equitable award based on the extent of consultation efforts made prior to the dismissals. In instances where consultation has been entirely neglected, the default protective award begins at the maximum of 90 days’ pay.
The government has recently introduced an amendment in Parliament that, pending approval, would empower tribunals to modify any protective award by up to 25% if it determines that either party has unreasonably deviated from a relevant Code of Practice, including the Code of Practice on dismissal and re-engagement.
While most employers tend to meet their collective consultation obligations, data from 2022/2023 revealed a staggering total of 5,026 tribunal cases where employers failed to properly inform and consult employees regarding redundancies. Furthermore, some employers opt to sidestep consultation altogether by providing employees with settlement agreements that offer higher termination payments than what they would otherwise receive through a protective award. The purpose behind both proposed options is to diminish any incentives employers may have to evade their consultation responsibilities.
The consultation outlines two potential directions:
- To elevate the maximum protective award permissible by tribunals from 90 days’ pay to a potential 180 days’ pay.
- To eliminate entirely the cap on protective awards, thereby granting tribunals the discretionary power to determine the award level based on the intricacies of each case.
In cases involving insolvent businesses, however, the existing provisions remain unchanged, with the Insolvency Service maintaining a cap of eight weeks’ pay on any protective awards made, thereby protecting vulnerable employees affected by business failures. The tribunal will continue to assess claims based on what is deemed “just and equitable,” taking into consideration the unique circumstances and the severity of any failures on the employer’s part.
Interim relief
Interim relief, although infrequently utilized, is a vital mechanism permitting claimants to maintain their employment status (or, should they be unable to work, to continue receiving salary and benefits) until the entirety of their case is heard. This relief mechanism is available exclusively to certain categories of unfair dismissal claims, specifically those outlined in sections 128-132 of the Employment Rights Act 1996 and sections 161-166 of the Trade Union and Labour Relations (Consolidation) Act 1992, which incorporates whistleblowing scenarios. Claimants must submit their applications for interim relief within seven days of dismissal, and these are subsequently assessed by a tribunal in a prompt manner. If successful, the tribunal can order the employer to either reinstate or re-engage the dismissed employee, or if the employer opts not to re-employ, to continue wage and benefit payments pending the ultimate hearing. The tribunal will only affirm interim relief in cases that, upon review, indicate a likelihood that the dismissal was executed for a protected reason.
The current consultation seeks insights into the expansion of interim relief rights in two scenarios:
- Whether employees claiming for protective awards, stemming from failures to inform and consult during collective redundancy circumstances, should be granted the right to seek interim relief. This adjustment would ensure employees are not disadvantaged while awaiting hearings and, as suggested in the government consultation, would deter employers from choosing to bypass their consultation obligations.
- Whether those filing unfair dismissal claims resulting from fire and rehire tactics should also have access to interim relief protections.
Additionally, the consultation encourages consideration of any necessary modifications to the existing interim relief processes, ensuring that such relief is effectively applicable to these new situations and can be determined promptly by tribunals. The government is keen to gather perspectives from both employers and employees regarding the practicality and implications of this proposal, as such insights could inform adjustments to the Employment Rights Bill. Furthermore, the consultation document indicates that the government anticipates gathering input on enhancing the collective redundancy framework in 2025, including potential proposals to double the minimum consultation period from 45 days to 90 days for larger scale redundancies involving 100 or more employees.
