Employee Consultation

An interesting development on the old employment relations front this week with the announcement of a new statutory code of practice concerning, well, that strictly remains to be seen.  Scarcely able to stand up under the weight of politically-charged invective and hyperbole, the government’s statement refers to “clamping down” on “unscrupulous employers” which fail to engage in meaningful consultation with employees before issuing notices of termination, seemingly whether they are then re-hired or not.  So far we have only the announcement rushed out to capitalise on the obvious political dish of the day but no actual code, so beyond a proposed 25% uplift in compensation for failure to abide by the new code, details of exactly what it will cover or how it will work remain unclear, in fact actively obscure. It is hard to think that it can go much further than a more toothy re-hash of the recent Acas guidance on fire-and-rehire practices. This says essentially that the practice should be a last resort after you have fought your way through all the different grievance, failure-to-agree and industrial dispute levels in your collective agreements, consulted to infinity and beyond and then consulted a bit more.

It may be better that we are spared the details for the time being, since although it is obviously spurred by events at P&O, the intended code seems to suffer from one overriding problem, being that the law already roundly penalises employers which take that course and that this will make no difference to that.  Where individuals are concerned, for example, a failure in consultation is very likely to make the dismissal unfair and lead to compensation accordingly. Particularly egregious employer conduct in the dismissal process can already be reflected through that number.  Similarly, where collective terminations are the issue, the 90 days’ pay protective awards available under the Trade Union and Labour Relations (Consolidation) Act 1992 already exist as a substantial deterrent. That is backed with the existing authority of the Court of Appeal in 2004’s Susie Radin –v- GMB for the employment tribunal to reflect in the level of award made the degree of deliberation in any non-compliance with the consultation obligations.

The UK does not have any equivalent of the rule in some countries within and outside the EU that an improperly-conducted dismissal is simply void.  Especially post-Brexit, that seems wildly unlikely to change.  Therefore the consequences of a failure to consult will generally have to be measured in money only.  If the employer is willing to carry that cost as a considered step towards the achievement of its commercial objectives, can it necessarily be blamed for taking that course?  The Minister’s references to deceitful, unscrupulous and appalling conduct all seem more than a little histrionic in the circumstances. The employer is only doing what the law allows – dismissing in a certain way and paying for it.

Presentationally, omitting any collective consultation at all can of course look dire and you are likely to have stakeholders running for cover in all directions. It is obviously also very expensive. But is that really different in principle from the decisions made by employers every day to dismiss senior executives who have perhaps quite unknowingly crossed someone even more important?  There is often no pretence that the dismissal is statutorily fair, perhaps because of the lack of prior warning and almost certainly due to lack of consultation, but if the cost of an unfair dismissal is judged containable and all or most of it is offered up front, the employee can have considerable ground for moral outrage but very little useful to say from the legal perspective.  That is a conscious decision made by the employer to act unfairly in the knowledge that it is willing to do the decent thing by the employee (apart obviously from the dismissal itself) in order to save itself what it already knows will be a bloody, time-consuming and completely pointless debate with the individual.

The P&O exercise is just the same thought-process but on a much larger scale.  It seems obvious from reports that nearly all those affected are choosing to take the money and run that the company has not sought to nickel-and-dime the employees on their resulting entitlements in any way, including those arising under the protective award regime. If the 25% uplift is triggered by an “unreasonable” failure to comply with the new code, will it be unreasonable for the employer to make a reasoned commercial judgement to that effect?

Therefore, the question must remain – apart from potentially increasing the cost of that sort of decision to employers in future (and not even necessarily that – see below), will the new code of practice really add anything to the existing unfair dismissal or collective redundancy consultation regimes?  If the employer is proactively willing to pay the relevant award, whatever that may be, why should it be prevented from making the decisions which would trigger it?  Employers make commercial judgments of that sort all the time, and this new code has next to no chance of preventing that.

The code also potentially carries a substantial number of hostages to fortune in its interaction with the existing law, TULCRA in particular. These are points which will have to be resolved before it is issued if it is to carry any credibility at all. As a code only, for example, it does not alter the statute.  Therefore on the face of it the 90 days’ pay cap on the protective award in section 189 would be untouched.  If the employer is willing to pay that, therefore, the code will be of no impact at all.  Lower down, the Labour Market’s Minister’s announcement is big on crowd-pleasing shock-horror language but contains nothing to explain when an employer would cross the line from an “ordinary” failure under the TULCRA rules to something “unscrupulous” attracting the proposed 25% mark-up.  If it is the difference between inadvertence and intention, for example, the ETs already have that discretion under Susie Radin.

Then we must consider whether an intentional failure means any deliberate departure from the statutory consultation rules, however minor or well-intended and however limited or non-existent its adverse impact on the employees concerned.  How would that play in small non-union environments, for example, where the employers chooses not to go via the process of electing staff representatives, but instead to gather all its staff in one place and talk with them direct as adults?  That would obviously be faster, more productive and less alienating to employees than forcing them to make representations via someone else when they consider themselves entirely able to do it direct.  Would that now attract an uplift in any protective award?

Relatedly, what does the government’s announcement mean by “meaningful” consultation?  Of course, that must include a requirement of good faith, but what if the employer reasonably makes an entirely good faith judgment that its proposals stand no chance whatsoever of being acceptable to workers and their representatives, or if the consultation process is actually started and that judgement then changes from assumption to certainty?  Is a consultation process really “meaningful” if all the parties to it know that there is no prospect of any agreement arising as a result?

It is also not clear from this week’s announcement whether this is a collective issue only or applicable equally to individual dismissals.  It would be tempting to assume the former, but the announcement on gov.uk does contain a reference to the potential uplift applying equally to unfair dismissals.  Strange, because I thought the ETs already had scope to increase unfair dismissal compensation by up to 25% in the event of a serious failure to comply with the Acas code of practice, though still subject to the overall cap. To that extent also, the new code would seem to add little.

In other words, it remains possible to conclude that this new code is more political posturing than any genuine attempt to alter the law or practice around redundancies on the one hand or dismissal and re-engagement on the other.  Doing that would require the government to put a great deal more thought into consideration of the nuances and commercial realities around individual or collective consultation processes than is evident so far.