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The Government has launched a consultation to consider changes to the rules on collective redundancies.
Norman Lamb, Minister for Employment Relations, said that the current rules on collective redundancy "do not fit the current economic climate" as they slow businesses' ability to restructure and respond to changing market conditions and are "much more restrictive than the rules in many other EU member states".
The proposals outlined in the consultation include:
Reducing the 90-day minimum consultation period and replacing it with either:
a) 30 days for all collective redundancies; or
b) 45 days for planned redundancies of 100 or more employees;
Improving guidance to increase certainty about how to define an "establishment" and treatment of fixed term workers in redundancy consultation;
The consultation closes on 19 September 2012 and the Government will publish its response by the end of the year. Any subsequent changes to the rules will extend to England, Wales and Scotland.
For employers, the benefit of a reduced consultation period is that it will expedite restructuring where a consultation is genuinely complete within 90 days and save on administrative and salary costs. The government say that employees will benefit by providing greater certainty which should help reduce the impact on morale and productivity.
Importantly, although the government wants the minimum consultation period to decrease substantially from 90 days, there is no proposal to reduce the maximum protective award from the present 90 day's pay per person, which the government says is a necessary and proportionate sanction to ensure compliance.
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