December’s news that the government will be cutting the redundancy consultancy period from 90 to 45 days was destined to polarise people. The question is are the benefits of the reduced notice period being overstated?
With the suggestion of a triple-dip skulking on the horizon, the last word anyone wants to hear is ‘redundancies’. However, there was a grim inevitability to the announcement last month that the government was going to slash the redundancy notice period for businesses with more than 100 employees. Its programme to cut employment regulation has been one of the coalition’s foremost agendas since the election and in the wake of the ‘rights-for-shares’ scheme it seemed unlikely that the raft of reforms were likely to run aground any time soon.
Even so, the revisions to the redundancy notice period seemed to be marked by a pronounced intake of breath from some quarters. It isn’t hard to understand why such a move might prove to be controversial: during the first two years of the economic downturn, the CIPD found that two-thirds of those made redundant had to take an average pay cut of 28% to return to work. Minimising redundancies is clearly a high priority on anyone’s agenda. But there are also plenty of businesses that would maintain that the ability to react flexibly to economic trouble is the only way to prevent much wider unemployment if firms are forced to close entirely.
Few businesses are hardly likely to want their hands bound by an increase in the amount red tape. But is this latest move simply one snip too far?
says Tony Burke, assistant general secretary of Unite
Quite frankly, these ideas are appalling. It will not create one new job, it will not help towards creating new growth – in fact, we just see it as a continuation of the war the government is waging on working people. The consultation period is there so that companies can discuss with unions and the workforce ways to reduce the number of redundancies, to save jobs and reduce the effect on the economy.
We’ve got experiences in Unite where we’ve had to use the full 90 days. There was a print company in the south-east of England who notified us of closure, but, after much longer than 45 days, following a lengthy period of discussions and negotiations, an agreement was reached – the company has stayed open for a year and it’s now at no risk of closing.
All it’s going to do is damage to the economy in the long term. Companies, rather than negotiating, will make a decision to lay people off and the end result will be that benefits will need to be paid out earlier and it’ll break up skilled workforces. It’s all part of the race to the bottom. This is ideological and there’s no logic to it.
says James Hick, managing director of ManpowerGroup Solutions
From a business perspective, the need to be more agile and quicker to react to market conditions is critical. If you look at the wider picture, in terms of employment, it has gone through a fundamental restructure, which has been driven by increasing sophistication within the supply chain, technology and individual choice of how consumers and individuals are working. If you can’t react to any of those work mega-trends, then we’re going to be less competitive. So it’s a very welcome change.
The last thing organisations want to do is reduce the talent in their companies. What we’ve seen is companies bend over backwards to protect the people they have. It’s been an extraordinary year in 2012 where there’s been a double-dip recession and yet employment has continued to rise. The net position is 500,000 new jobs have been created. This isn’t about helping to increase the speed of the race to the bottom; it’s just another adjustment to the changing nature of work.
The need for flexibility, in a well-managed and constructive way, will continue to be critical to make sure we’re competitive at a micro-level and a macro-level.