Mass redundancies across the UK
have led DTI Secretary Stephen Byers to take another look at consultation, as
Richard Staines reports. But HR has been left out of the review so Personnel
Today raised this with the Government
In the past two months, more
than 6,000 jobs have been axed by steel giant Corus and 2,000 by car maker
Vauxhall. In both cases, staff were informed of the restructuring on the same
day the media were notified.
It has prompted a storm of
protest from politicians, unions and the public, and has raised doubts over the
UK’s voluntary partnership approach to staff consultation.
Trade and Industry Secretary
Stephen Byers responded to the mounting pressure by announcing a review in
January to establish if the laws requiring consultation "in good
time" are working and if more should be done to promote effective
consultation with employees.
But many are critical of the
woolliness of the proposed review. There are scant details on the timing of the
review and how it will be conducted. Also, the Government intends to consult
only with the CBI and TUC. It will not include the CIPD in the process and will
thus be ignoring the views of HR professionals.
Mike Emmott, the CIPD’s
employee relations adviser, said, "I think it is regrettable that we are
not being consulted. The knowledge and experience of CIPD members have on this
issue could be very helpful and would add weight to the rather limited
Many are concerned that with an
election looming the review is simply a PR exercise. Emmott said, "I don’t
believe this review will really change things legally ñ it will just clarify
the Government’s standing on this issue."
HR directors such as Bruce
Warman at Vauxhall and Allan Johnston at Corus have been in the eye of the
redundancy storm, so to exclude their opinions and those of their peers is
In response, Personnel Today
sent a letter to Byers this week calling for a thorough and speedy review that
produces more than just pre-election soundbites.
Employers have made it clear
that they do not want the DTI review to strengthen consultation law in
Under current UK law, companies
must consult with employees for 90 days following a mass redundancy
Increasing globalisation and
the strength of the pound are making it hard for UK manufacturers to compete in
their markets. Warman claims that a strengthening of consultation legislation
would have little impact on business.
He said, "The lobbying of
the Government to beef up employee consultation rights will make little
difference to the decisions being made. This will not add value to the
legislation in place in the UK ñ it’s like trying to impose a stock solution on
to a multi-coloured tapestry of arrangements."
Peter Sheraiker, group HR
manager for furniture manufacturer Tetrad, agrees. "The Government is
oblivious to the pressure the manufacturing industry is under in the UK. We are
just not competitive enough, but this has nothing to do with employee
productivity. The issue is much wider and concerns the strength of the pound
and the competitive labour market."
The CIPD, CBI and the Employers’
Forum on Statute and Practice all urge the Government not to reduce employers’
rights to make business decisions.
EFSP chief executive Robbie
Gilbert said, "We already have a requirement to have representation when
there are redundancies already. We do not think it is necessary to have some
kind of standing arrangement to cover redundancies."
CBI policy adviser Simon Blake
said, "The impact of any legislation will be to slow down the
decision-making process. You cannot legislate for good management. If you do,
then it results in a compliance approach, which becomes a cost rather than a
benefit to business."
But the momentum for change to
the consultation process is increasing. In a recent Commons debate, Labour MP
Tony Lloyd said, "The right to know what is going on and what is likely to
affect individual employees simply does not exist for most who work in British
industry and commerce.
"It would be a tragedy if
we turned our backs on the clear need for change following the terrible
experiences of British workers in recent months."
The 50 MPs involved in the
debate went as far as "naming and shaming" companies over their
consultation policies. The list includes GM-Vauxhall, Coats Viyella, Biwater
The TUC claims that existing
legislation, such as the European Works Council directive, needs to have more
teeth. Sarah Veale, employment rights officer at the TUC, said that while the
directive does apply to the Vauxhall and Corus announcements, it only has the
power to impose fines of up to £50,000.
Veale said, "What we want
is legislation that is more punitive and will make employers think twice before
making decisions without consulting.
"A good employer should
have nothing to fear from consulting with its workforce before such decisions ñ
indeed the process could turn up creative solutions to the problems it faces."
studies: Staff consultation in practice
A detailed DTI study on
redundancy consultation looks at how eight unidentified companies consulted
their staff when making employees redundant.
Here we select two cases and
pull out key points for employers. Under UK legislation, all employers that
announce more than 20 redundancies in a 90-day period have to consult with
elected representatives from their workforce.
EngCo is an
engineering company of 530 employees with little history of redundancy, but it
needs to remain competitive. It decided to outsource some activities, which
resulted in job losses. The firm had an established shopfloor union, but office
staff did not belong to a union. It was making 65 people redundant.
What HR can
learn: The report claims that consultation is more effective than is
sometimes suggested, although there are limits to it. It says, "In
practice the key decisions were made by management, with consultation focusing
on the process of handling job losses not the principles."
The union was able to defend
the established principle of last in, first out, and also to shape the
definition of how the principle actually worked. It also made suggestions for
reorganisation, which were felt to have saved four or five jobs out of 65.
Management also had to consult
with non-union office staff, and representatives there also made suggestions as
to how to avoid some redundancies, for example, reducing the use of temporary
staff and through redeployment.
The more positive outcomes
occurred where management took "a participatory and flexible
is part of a large company of 840 staff and specialised in overnight
distribution. Reorganisation led to the closure of a depot that affected all 46
workers and there was no need for specific selection criteria. The firm is
unionised and consultation was through long-established channels.
What HR can
learn: As the report says, "often redundancy is often part of a wider
restructuring agenda". In the DistribCo case there were obviously other
matters to be resolved first. Debate focused not so much on the redundancies as
on associated changes in terms and conditions for staff who remained in
Some small concessions were
made, but union and staff remained unhappy about having to accept significantly
changed working practices.
One key lesson on consulting
with staff over redundancies stands out in the report ñ make sure that staff
representatives are trained and have the information to perform their role.
Employers should develop guidance for their staff, possibly using their
employers’ associations or professional bodies to indicate good practice.
research paper, Redundancy consultation: a study of current practice and the
effects of the 1995 regulations (1999)