Brexit: Managing Restructure and Redundancies

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Brexit: Managing Restructure and Redundancies

Brexit: Managing Restructure and Redundancies

The prospect of redundancy is daunting for both employers and employees. For employers, following the correct procedure is critical to ensure they don’t fall foul of the law and for employees, knowing how to enforce their rights and ensure they are treated fairly in the process is important.

Since the economic downturn in 2008 large scale redundancy situations have been relatively sparse, albeit we are all familiar with those that have hit the headlines which has included MG Rover and Tata Steel. In light of recent political decisions, namely the US presidential election, Brexit and the Italian referendum there is increasing scope for hiring freezes and redundancy situations.

Specifically focussing on Britain’s decision to leave the European Union (the “EU”), 5 per cent of British employers have confirmed that they expect to make redundancies according to a survey of more than 1,000 employers led by the Institute of Directors. This could be due to employers moving their operations outside of Britain to remain within the EU, which may not be a daunting task for organisations who have an international presence and infrastructure in place to readily move their operations. This is particularly true of the banking industry, where it is estimated that around as many as 50,000 to 70,000 finance jobs in the City could be cut.

Yet other industries should not become complacent. Industries and the organisations within them thrive off each other, selling products, goods and services to ensure they are fully functional. A reduce in demand within one industry, could significantly impact upon the supply for another industry. British industries and organisations may also feel the wrath of European competitors being able to provide the same goods, products and services at reduced prices.

We must also consider that Brexit could have an impact on the legislation currently governing redundancy. At present, employers have a duty to inform and consult the workforce about proposed redundancies as contained within the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULR(C)A). Employers are required under TULR(C)A to consult in circumstances where they propose to dismiss 20 or more employees at one establishment within a period of 90 days or less. Ensuring that employers follow the redundancy procedure is crucial, as a failure to do so could result in large financial penalties.

TULR(C)A was introduced to implement provisions contained within a European Directive. Whilst European laws will need to be negotiated upon Britain’s exit, it is unlikely that redundancy laws within Britain will diminish. Any proposals to reduce protection for employees in redundancy situations would be heavily disputed by trade unions and could have significant consequences on industrial relations in Britain.

Our employment team specialise in restructures and redundancies and can provide the right level of support throughout any consultation process whether with employees or unions. For more information, please contact our employment team on 0345 070 6000.