Insolvency Service
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Redundancy consultation outcomes to be improved

The Business Minister Jo Swinson launches a call for evidence seeking views on how to improve consultation and information sharing between employers and employees when a company is faced with insolvency.

The Insolvency Service is seeking views from industry and the public on the challenges faced by businesses around consulting employees about potential redundancies surrounding insolvency and how to make consultation more effective to improve the outcomes for both the employer and employee.

Jo Swinson said:

“Constructive engagement with employees is important for business at all times, but especially when facing situations such as insolvency. The purpose of this call for evidence is to look at consultation with employees where a business is facing insolvency or has moved into an insolvency process.”

“Whilst our current system generally works well and is effectively complied with and its benefits agreed upon, we want to explore in more detail how consultation operates in these situations and what are the challenges and best approaches.”

Jo Swinson met with key stakeholders last month to hear first hand how the industry viewed the current legislation, what the difficulties were and what support was available for both employers and employees facing redundancy.

The call for evidence, which will run for 12 weeks, is asking views on:

  • understanding of the current requirements, their purpose and benefits
  • factors that facilitate or inhibit effective consultation
  • ensuring timely notification and effective consultation

Notes to editors

Employers proposing to make more than 20 employees redundant at an establishment within any 90 day period must consult them and inform the Secretary of State for Business, Innovation and Skills about the proposals.

Consultation can mean that unnecessary redundancies are avoided or the impact mitigated.

Inadequate consultation can lead to a Protective Award being made against the employer by an Employment Tribunal. If the business is insolvent some or all of the Protective Award may be claimed from the National Insurance Fund.

In some high profile cases the cost of this to the taxpayer has run to tens of millions of pounds.


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