Employment Rights Bill: Government consults on collective consultation and fire and rehire remedies

The Government has launched its promised consultation on strengthening the remedies for breaches of collective consultation and fire and rehire rules. Here we outline the current law, highlight the Bill’s changes and look at the proposals the Government is consulting on.

Current law

Collective consultation

Employers must consult collectively (with trade union or other elected employee representatives) if they propose 20 or more redundancies at one establishment within a 90-day period. Consultation must begin in good time and at least 45 days before the first dismissal takes effect (where 100 or more redundancies are proposed) or at least 30 days before the first dismissal takes effect (where 20-99 redundancies are proposed). Similar obligations apply where an employer proposes to secure changes to 20 or more employees’ terms of employment by dismissing them and re-engaging them on new terms (‘fire and rehire’).

Where an employer fails to comply with its collective consultation obligations, an employment tribunal can make a protective award of up to 90 days’ full pay for each affected employee.

Fire and rehire

Where an employer is unable to secure their employees’ agreement to a change in their employment terms, they are able to dismiss on notice and offer them a new employment contract containing revised terms. Employees with at least two years’ service can bring an unfair dismissal claim. Employers therefore need a good business reason for dismissal and to follow a proper process, including following the Acas Code of Practice on Dismissal and Re-Engagement. Failure to comply with the Code can lead to an uplift in compensation of up to a 25%.

Interim relief

Interim relief is a remedy currently only available in a small number of unfair dismissal claims, such as whistleblowing claims. Interim relief applications are heard at an early stage (the claim has to be brought within 7 days of dismissal) and, if granted, the employer is ordered to re-instate or re-engage the employee pending the final hearing. If the employer does not want to re-employ the employee, they must continue to pay them their salary and benefits until the full hearing. Interim relief may only be granted where a tribunal considers it ‘likely’ (in the sense of there being a pretty good chance) that the employee will succeed in showing at the final hearing that they were dismissed for the prohibited reason i.e. in the case of whistleblowing, that they were dismissed for making a protected disclosure.

Employment Rights Bill changes

The Employment Rights Bill will strengthen an employer’s collective consultation obligations so that the obligation to consult (in respect of both redundancies and ‘fire and rehire’ dismissals) will be triggered based on the number of employees affected across the whole business, rather than in a single workplace/site/office.

The Bill will also severely limit the circumstances in which an employer can effect changes to terms and conditions of employment by using ‘fire and rehire’. Any dismissal for refusing to agree a change to contractual terms or to enable the employer to continue employing the employee to do substantially the same job under a varied contract will be automatically unfair unless, in essence, the change is necessary to ensure the business’s viability and could not reasonably be avoided. You can read more about the Bill’s provisions here.

What is the Government consulting on?

Collective consultation

The Government seeks views on its proposal to increase the maximum protective award and is considering two options:

• Increasing the protective award from 90 to 180 days’ full pay
• Removing the cap entirely, leaving it to the discretion of the employment tribunal to decide the level of the penalty.

As an additional deterrent against abuse of collective consultation rules, the Government is also considering whether interim relief should be available to employees who bring claims for a protective award, where they are able to show that their protective award claim is likely to succeed. The Government asks for views on how this might impact employers and employees, how it would work in practice and how it might interact with any increase to, or removal of, the protective award cap.

‘Fire and rehire’

The Government is considering whether interim relief should also be available to employees who bring claims for automatic unfair dismissal in ‘fire and rehire’ cases.

What does this mean for employers?

These proposals are significant. The Government wants to make it more difficult for employers to buy employees out of their rights and in doing so to improve employers’ compliance with their legal obligations. Although interim relief applications are not that common at the moment, this is usually because employees are not aware of this potential remedy. By the time they seek legal advice, it is too late to claim it. With unions often involved in collective consultation processes (and potentially having deeper pockets to fund claims), we could expect to see a considerable increase in interim relief applications if this were made an additional remedy in collective consultation and fire and rehire unfair dismissal claims

Responses to the consultation are required by 2 December 2024.

Contact us

For further information on how these changes could affect your business, please contact a member of our Employment team or submit an enquiry form, below.