TUC is lobbying for improved redundancy rights to avoid repetition of Woolworths 2009 collapse and £67m compensation payouts

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Reducing consultation rights during collective redundancy exercises could cost jobs, damage workforce morale and increase unemployment, the TUC warns.

Currently, where employers are proposing to make between 20 and 99 employees redundant, they must allow for at least 30 days consultation with unions or workplace representatives before any job cuts can take effect.

Where 100 or more jobs are at risk the consultation period must last for at least 90 days.

The government is considering whether the 90-day consultation period should be reduced to make it easier, quicker and cheaper for employers to lay off staff. The TUC argues that cutting back these consultation rights will harm employers, employees and the wider economy.

During the last recession, many private sector employers worked with unions to find ways of avoiding mass redundancies and retaining skilled staff.

A recent TUC survey of workplace reps revealed that more than a third (36%) of employers were willing to agree to longer consultation periods than the statutory minimum, often willing to consult for 90 days or more when far fewer than 100 redundancies were planned.

The TUC believes that effective working relations between employers and unions help to avoid job cuts and to maintain the morale and loyalty of staff who survive restructuring exercises. For example, as a result of strong working relations with the CWU and Prospect unions, the BT group has succeeded in avoiding the need for any compulsory redundancies in recent years.

This is in contrast to the recent experience of former Woolworths staff and workers at the McCowans sweets manufacturer – where Usdaw pursued the companies for failing to consult over redundancies.

After Woolworths went into administration, USDAW brought a successful application for awards, winning £67.8 million for 24,000 Woolworths’ employees. Only last week, the union also secured more than £200,000 compensation for 103 former employees at McCowan’s who were made redundant when the company folded in October last year.

However 3,000 Woolworths workers were unable to receive compensation because the Employment Tribunal concluded they had been employed in separate shops which employed fewer than 20 people.

The Woolworths case is not an isolated example.

Unions regularly tell the TUC that employers attempt to restructure businesses and organisations into smaller establishment units to side-step the regulations.

TUC general secretary Brendan Barber said: “Genuine consultation between unions and employers is vital in a redundancy process, regardless of how many people are at risk of losing their jobs. Working together, unions and bosses can decrease the number of job losses, avoid compulsory redundancies and ensure that the redundancy process is fair. They can also retain skilled staff and maintain morale amongst remaining staff.

“As a result of the recession and government spending cuts, unemployment is now running at more than 2.6 million and tens of thousands of jobs will continue to be lost in the public sector this year. Rather than cutting back on consultation rights, now is the time for ministers to strengthen collective redundancy arrangements and protect working people and employers.”

The TUC believes the government’s current review of collective redundancy law provides an important opportunity to amend the law and to prevent a repetition of the recent Woolworths situation.


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