While on one hand the government is keen on reducing the consultation period for redundancies and has proposed legislations, companies are getting smarter at using the loopholes in the existing legislation.
Most industry leaders welcomed the latest move by the government of changing the employment law whereby it will become easier for companies to make mass redundancies especially when there are acquisitions and mergers or when companies move offices etc.
As per the current employment regulations, employers making redundancies of more than 100 people have to start consulting with trade unions and employee representatives at least 90 days before the redundancies are announced. While in some instances, the consultation periods may not last upto 90days, no job losses can be announced and redundancies made until the 90 days are up. This puts employers in a position wherein they have to continue incurring the costs for a period of atleast 90 days. If the number of job losses between 20 and 99, then the employers only need to give 30 days before they dismiss anyone.
There is an emerging trend of employers utilising this wedge and several employers who have announced redundancies in the recent past have all kept their numbers less than 100. Some make it more evident than others. For example, Lotus Car manufacturer - Group Lotus which is a subsidiary of Malaysian business Proton Holdings announced at their factory in Hethel, Norfolk that their roles could be at risk after the company launched a consultation over proposed cuts. In effect the employees will only get their 30 daysí notice as the number of redundancies is less than 99.
Lotus is yet another victim of government cuts. Lotus lost £27.5 Million funding from the government's Regional Growth Fund. The fund was to help Lotus to grow its base and recruit more employees. While Lotus has encouraged people to seek voluntary retirements, involuntary redundancies are inevitable.
Stuart Boseley, Director of Best Insurance commenting on the practices of employers said ìIt is inevitable that when a company is in financial difficulty, cutting staff unfortunately happens to be an easier short term solution. Employers limiting mass redundancies to less than 100 are not uncommon; it is just being picked up now as the number of redundancies has drastically increased over the last 12 months. Our advice to our customers has always been to have alternate arrangements of income such as income protection insurance or redundancy protection cover, as no one's job is guaranteed. A small investment - typically of about £30 - £35 per month will enable people claim benefits of upto £ 2,000 if they are made redundant.
Best Insurance offers a wide range of income protection and payment protection products. They are one of the largest online retailers of redundancy protection insurance and also mortgage payment protection insurance. Best Insurance has access to a wide range of insurers and they assist customers in selecting the right product to suit individual circumstances.
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