Making Work Pay: collective redundancy and fire and rehire

The Government is consulting on strengthening remedies against the abuse of rules on collective redundancy and fire and rehire. This follows the publication of the Employment Rights Bill (see Advisory Bulletin 728), which contains provisions on collective redundancy consultation and fire and re-hire.

For the collective redundancy framework, the Government is seeking views on the proposal to increase the maximum period of the protective award that a tribunal can award. The options being considered are:

• increasing the protective award that a tribunal can award from 90 to 180 days
• removing 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.

For fire and rehire practices, the Government is seeking views on whether interim relief should be available to employees who are bringing an unfair dismissal claim under the new right restricting fire and re-hire which will be introduced by the Employment Rights Bill. 

The consultation closes on 2 December 2024 and details of how to respond are on the Government’s consultation website. Local authorities will have varying views on the issues so we encourage them to respond direct to the consultation. If you do respond direct, please send a copy to us at [email protected].

The LGA will also be responding to parts of the consultation, and in order to assist us with that we should be grateful if authorities would email us their responses to the questions we have asked in the sections below which set out further details on the issues. They should be sent to us at [email protected] by 15 November.

Protective awards

At present, the statutory collective redundancy obligations are triggered where 20 or more dismissals are proposed within 90 days at one ‘establishment’, which in many cases can mean an individual workplace. The Employment Rights Bill will change this so that the duties will be triggered with reference to the number of dismissals across the employer as a whole, not just at the relevant establishment. This will mean the statutory collective consultation duties are likely to be triggered more often, in local authorities.

Where employers do not comply with the obligations, employment tribunals can make a protective award of up to 90 days’ pay to each affected employee, taking into account what is just and equitable in the circumstances of the case. In practice, this means the award would be linked not just to the length of any consultation if that did take place, but also to any efforts of the employer to comply with the totality of the rules and the reason for any breach.

The Government considers that while most employers have sought to comply with their collective consultation requirements, in a limited number of cases some employers have deliberately decided not to comply with them. That might involve offering a settlement agreement to the affected employees involving a sum more than the size of the potential protective award, which could mean that the opportunity to explore preventing or reducing the number of redundancies through collective consultation will have been lost. For that reason, the Government is seeking to increase the potential size of protective awards to either 180 days or an unlimited amount, subject to the employment tribunal’s discretion.

It is very unlikely that local authorities will deliberately decide not to follow collective redundancy rules. Instead, any failures are more likely to be due to small administrative errors, or an inadvertent failure to recognise where or when the duty to consult has been triggered. That, in our view, is likely to become a greater risk with the Employment Rights Bill change which will mean the duties will be triggered with reference to the number of dismissals across the employer as a whole, not just at the relevant establishment. Therefore, in responding to this part of the consultation, authorities may want to consider whether the lower 90-day cap on awards should be kept in place for inadvertent and minor breaches, with a higher cap applying for deliberate and substantial breaches.

To assist the LGA in responding to this part of the consultation we would welcome local authorities’ responses to the following question:

1) Do you agree that the lower 90-day cap on awards should be kept in place for inadvertent and minor breaches of the collective consultation duties, with a higher or no cap applying for deliberate and substantial breaches?

Interim relief

Interim relief currently applies to certain unfair dismissal claims. In effect it is a process which ‘fast tracks’ the claim so that shortly after the claim is submitted the tribunal assesses whether it is ‘likely’ that the claimant was dismissed for the relevant reason. If the tribunal finds that to be the case, then it can make an order that the claimant is re-instated or re-engaged pending the full tribunal hearing  .

The Government is exploring whether in the case of a claim for a protective award interim relief would apply as follows – where an employment tribunal finds on an interim relief application that it is likely that the claim for a protective award would succeed, then it could make an order that the employer must continue to pay the claimant, pending the full hearing.

Similar to the question of the size of protective awards, authorities may want to consider whether interim relief should only be available in cases of deliberate and substantial breaches of the collective consultation duties. We anticipate also that if interim relief were introduced, authorities would want to see that the tribunals were properly resourced to deal with such applications promptly and efficiently.

To assist the LGA in responding to this part of the consultation we would welcome local authorities’ responses to the following question:

2) Do you agree that interim relief should only apply in cases of deliberate and substantial breaches of the collective consultation duties?

Interim relief

The Employment Rights Bill includes a provision which will mean that subject to some limited exemptions, a person will be regarded as automatically  unfairly dismissed if they are dismissed due to ‘fire and rehire’ reasons (see Advisory Bulletin 728).

This part of the consultation concerns whether interim relief should be available to individuals bringing a claim under this new right. If it was made available, then on such an application, should the employment tribunal find that it was ‘likely’ that the unfair dismissal claim would succeed, the effect would be that the individual would continue to be paid, pending the final full merits hearing. The Government considers therefore that providing a right to claim fire and rehire would be a further disincentive  to using fire and rehire   .

We anticipate the fire and rehire provisions as currently set out in the Employment Rights Bill would alone mean that fire and rehire would no longer be used by local authorities and many other employers. This is because they would not want to face the risk of an automatic unfair dismissal claim. Any further ability therefore for an individual to claim interim relief would be an unnecessary additional disincentive to many employers considering using fire and refire. If interim relief were introduced though it would be important that the tribunals were properly resourced to deal with such applications promptly and efficiently.

To assist the LGA in responding to this part of the consultation we would welcome local authorities’ responses to the following question:

3) Do you consider the ability to claim interim relief would be necessary to provide a disincentive to your authority from using fire and rehire, or would it be unnecessary bearing in mind the authority would already be facing the risk of an automatic unfair dismissal claim should fire and rehire be used?

Please note also that we are discussing the fire and rehire provisions more generally with the Government in terms of their potential impact on local authorities, and to assist with that we would be grateful if authorities would answer the following question:

4) Has your council used ‘fire and rehire policies’ at any point in the past five years? If so, for what reason(s) did you use fire and rehire?