Consultation on job losses must be made to work

As more firms wield the axe, what gives more staff consultation meaning?  By Dominic Johnson

The debate on redundancy consultation sparked by recent high-profile
closures such as Marks & Spencer (in France) and Motorola has generated more
heat than light. Unions advance two arguments that these cases show the
inadequacy of UK legal requirements – that UK law does not require meaningful
consultation and that it is cheaper and easier to sack staff in the UK than in
France or Germany. But neither claim stands up to scrutiny.

So what should meaningful and effective consultation be about? The CBI
suggests three key objectives:

– To deliver a dialogue on proposed redundancies in which management
explains and justifies its proposals and, where presented with compelling
evidence, is willing to change them.

– To deliver discussion of the implementation of proposed redundancies,
including where job losses will be made, how they will be undertaken and what
redeployment and training opportunities may be available.

– To achieve open discussion with redundancy "survivors" on the
implications of proposals for job security and workload.

Meaningful consultation is not about rights for employee representatives to
substantially slow down or overturn management decisions. Rather, it is about
management accepting that plans likely to affect staff fundamentally should be
explained and scrutinised.

Companies do not make redundancy proposals lightly and it is unlikely that
consultation will throw up such startling evidence that will make management
rethink its plans. But it is central to the idea of meaningful consultation
that this possibility exists.

The Collective Redundancies Regulations require precisely this kind of
approach. Consultation must focus not just on the timing and implementation of
proposals but on the substance of decisions leading to redundancies in the
first place. Proposals must be tabled while they are at a "formative
stage", including an examination of whether redundancies are necessary,
ways to reduce the number of dismissals and ways to mitigate the consequences
of dismissal (such as retraining).

These requirements are backed by stiff penalties if companies get it wrong.
Ninety days’ pay for each affected employee – not just those who are facing
dismissal – focuses the mind.

What about the impact of redundancy costs on employers’ investment
decisions? The critics argue that British jobs are lost before French or German
because it is cheaper and faster to dismiss here. But although UK law is
marginally less onerous, the key point is that companies do not make divestment
decisions on the basis of the one-off costs of how cheap it is to sack staff.

Restructuring decisions are driven by the economic fundamentals –
productivity, proximity to market, exchange rates, capacity, corporation tax
and so on – not by labour law. Arguments that UK jobs could be saved by trying
to buck the market with tighter rules are fantasy.

How, then, should government respond to the redundancy consultation debate?
The CBI believes there are two priorities. First, clarify employers’ legal
duties by incorporating court judgments into law. Second, promote understanding
of how to achieve effective employee consultation and involvement. Existing
guidance – such as the Acas handbook – has too low a profile.

Dominic Johnson is head of employee relations at the CBI

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