LGA response to consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire

• be increased from 90 to 180 days?
• be removed entirely?
• be increased by another amount?
• not be increased? X 

Please explain your answer  

A current cap of 90 days should be retained, especially for inadvertent and minor breaches of the collective redundancy duties.  

Local authorities always seek to comply with their collective redundancy consultation duties in a meaningful way, and in this respect have well established processes for ensuring that. This will involve meaningful dialogue with the recognised trade union/s, as well as consultation with employees on an individual basis. However, the change under clause 23 of the Employment Rights Bill meaning that the duties will be triggered with reference to the number of proposed dismissals across the whole employer, not individual establishments, will result in the duties being triggered more often in local authorities. This is because local authorities employ workers across a wide range of functions and locations, which currently fall into the category of separate establishments. For example, schools will often be separate establishments, and so at present the duties are triggered with reference to those smaller units. In that respect it is important to note that those separate establishments will often have separate and autonomous management functions, so decisions on proposed dismissals will be made at that establishment level.  

While the change in the law would no doubt result in local authorities and other large employers putting procedures in place to try and ensure that a central record of the number of proposed dismissals across the employer is known, it must be recognised that at some times the duties may be inadvertently triggered, due to decisions on proposed dismissals being taken separately across various parts of the authority. In those circumstances, it would be wrong for authorities to be unduly penalised for such inadvertent breaches, which in many cases will be minor as once it comes to light that the duties have been triggered, authorities will then take all reasonable steps to remedy the situation.  

While it is recognised that protective awards will ultimately be made on a ‘just and equitable’ basis, and so it is hoped that awards would not exceed 90 days should the cap be increased to 180 days, nevertheless, it would still mean employers would have less certainty about the potential maximum award, should the cap be increased.  

•  yes
• no X
• don’t know  

Please explain why and note any other benefits?  

Local authorities already make extensive efforts to ensure that the collective consultation duties are complied with, and that is driven not only by the importance as large public sector employers of complying with the law, but also to underpin and maintain good industrial relations with recognised trade unions and employees. We anticipate the same will apply for many other employers and so increasing the maximum protective award to 180 days is in our view unlikely to incentivise employers further to comply with the duties. In any event, the prospect of 90-day awards being payable to a number of employees is already a substantial financial incentive to comply with the duties. 

As set out above, the impact on employers in terms of incentivising them to comply with the duties will be minimal, if any at all. However, increasing the potential for protective awards in all cases to be 180 days, and not 90 days, will potentially have a substantial impact on local authorities’ finances, not only in terms of where such large awards are made, but also in terms of financial planning where claims for such awards are pending. In such cases the local authority may well have to budget on the basis that 180-day awards could be made, meaning that money cannot be allocated to the delivery of public services in the interim.

 We do not consider the impact will be substantial, as any increase in the award is unlikely to drive up compliance with the collective redundancy consultation duties to any significant extent.

As set out above, the main risks will be financial ones, which will in turn impact on local authorities’ ability to deliver public services. 

•  yes
• no X
• don’t know  

Please explain why and note any other benefits?  

The same points apply as set out in our response to question 2 above. 

The same points apply as set out in our response to question 3, save that the removal of the cap in full would increase the financial risks and so in turn the size of the potential impact on the delivery of public services.

The same points apply as set out at our response to question 4 above.

 As set out at our responses to questions 3 and 5 the main risks will be financial ones, and the negative impact on the delivery of public services.

•  agree
• disagree X
• don’t know  

Please explain your answer  

We disagree that interim relief should be available, especially in cases of inadvertent and minor breaches of the consultation duties. The potential of an interim relief application in such cases would be disproportionate, bearing in mind the resources that would be needed to be made available at very short notice to defend such applications, and the substantial costs and disruption that would involve. 

•  yes
• no X
• don’t know  

Please explain your answer  

No, as set out above in our response to question 2, local authorities already make extensive efforts to ensure that the collective consultation duties are complied with, and that is driven not only by the importance as large public sector employers of complying with the law, but also to underpin and maintain good industrial relations with recognised trade unions and employees. We anticipate the same will apply for many other employers and so allowing interim relief applications to be made will be unlikely to create any substantial incentive to comply with consultation obligations. 

Similar to our response to question 3 above, the impact on a council’s finances and so service delivery, could be substantial, not only in terms of where such an application was successful, but also in terms of the resources and costs involved in defending such claims at very short notice.

While it is noted that where an interim relief award is made the employee will continue to receive pay pending the full hearing, we do not consider that otherwise the impact on employees will be substantial long term. This is because ultimately we do not consider that the potential for interim relief applications being made would incentivise greater compliance with the consultation duties to any great extent. 

Similar to our response to question 12, the main risks will be financial ones, and the consequential negative impact on the delivery of public services.

At this stage we have no further comments to make. 

 We disagree with adding interim relief awards to fire and rehire unfair dismissals. The use in local authorities of fire and rehire to effect changes to terms and conditions is rare, and it is very much treated as a last resort. The reason for making such changes will typically be driven by the pressing need to address for example equal pay and equality issues through the introduction of a new pay and grade system. Another motivation could be due to factors outside the control of the employer, such as a need to implement changes in the way that vital public services have to be delivered. Changes may also be needed sometimes to ensure financial budgets can be met. Underpinning this will be the need to deliver value for money to the taxpayer. 

Councils typically recognise trade unions for collective bargaining purposes and so terms and conditions in councils will normally be collectively agreed with unions. Therefore, where changes are required, councils will always seek to make them through agreement with recognised trade unions. Extensive efforts will be made to do that, involving often lengthy consultations processes with unions and employees.  

If the changes cannot be agreed with the unions, then councils might then consider whether agreement could be obtained directly with individuals. However, that carries risks, particularly in terms of s.145B of the Trade Union and Labour Relations (Consolidation) Act 1992, which makes it unlawful for employers to bypass the union by offering new terms and conditions directly to employees. 

In our view, therefore, both the potential of, and the making of, an interim relief award would be a disproportionate penalty on local authorities, bearing in mind the extensive efforts they will go to ensure that where fire and rehire is used, it is approached with the upmost care and only used when there is a very good reason.  

However, in any event we have concerns that the limits which will be placed on the use of fire and rehire through the new clause 22 in the Employment Rights Bill will in effect make its use in local authorities almost impossible. This is because the circumstances in which the exception to the right to claim automatic unfair dismissal in cases of fire and rehire are very limited. It appears to apply only where businesses are dealing with severe financial difficulties, and they need to make changes to employment contracts to allow them to cut costs to keep the business afloat. Those circumstances are very unlikely to apply in the case of councils. This is because while many councils are under severe financial pressures, it will be rare that they would be able to demonstrate that the financial pressures were such that they fell into the category covered by the exemption. For them to do so, it is likely that the council would need to have issued a section 114 notice, which is a notice indicating that the council’s forecast income is insufficient to meet its forecast spending for the next year, and that it must take swift action to address the budget shortfall. The issue of such a notice carries serious consequences and, therefore, they will only be issued where absolutely necessary. It would not be in the interest of council taxpayers or employees if local authorities had to wait until the finances required the issuing of a s114 notice to be able to change any term or condition that, for example, was needed to resolve equal pay issues or to progress the government’s devolution agenda.

•  agree
• disagree X
• don’t know  

Please explain why  

We disagree that it would.  As set out in our response to question 16 above, local authorities only use fire and rehire where absolutely necessary, and when they do they handle it with great care. This is not only because of the potential costs risks of claims arising from the process, but also in terms of trying not to unduly damage relationships with recognised unions and employees.  

Therefore, we do not consider that the potential of an interim relief award would materially incentivise local authority employers to comply with the law, as the incentives in place now are already enough to help ensure compliance.

Please explain why and note any other benefits 

The impact on a council’s finances and so service delivery could be substantial, not only in terms of where such an application was successful, but also in terms of the disruption, resources and costs involved in defending such claims at very short notice. 

While it is noted that where an interim relief award is made the employee will continue to be paid pending the full hearing, we do not consider that otherwise the impact on employees will be substantial long term. This is because ultimately, we do not consider that the potential for interim relief applications being made would incentivise greater compliance with the law on fire and rehire to any great extent. 

 As set out at our response to question 18, there could be risks to a council’s finances and so service delivery, not only in terms of where such an application was successful, but also in terms of the resources and costs involved in defending such claims at very short notice.

If interim relief was made available in fire and rehire cases, it would be important for employment tribunals to have the necessary resources to hear interim relief applications and then the following full merits hearing without delay.