For many employers, these figures reflect growing uncertainty ahead of the implementation of the Employment Rights Act (ERA). The new legislation is expected to make redundancies and contract changes more complex, time-consuming and potentially far more costly.
What’s changing under the Employment Rights Act
Under the ERA, the maximum penalties for failing to properly consult staff will increase from 90 days’ pay per employee to 180 days’ pay.
It is also expected that the threshold for collective consultation will be calculated across an entire business rather than by site, meaning more employers could fall within the scope of collective consultation requirements.
As a result, some organisations are choosing to accelerate planned redundancy or contract change programmes before the new rules take effect. The prospect of additional management time, higher costs and potential liability under the new legislation is prompting employers to act sooner rather than later.
The growing role of AI and outsourcing
Developments in artificial intelligence (AI) and outsourcing models are also influencing how employers approach workforce planning.
While entire teams are not yet being replaced by technology, some employers believe AI can enable smaller teams to absorb additional workloads following redundancies.
In addition, some employers are reducing their headcount by outsourcing various activities to third-party contractors. Outsourcing is now long established and businesses are willing to consider transferring activities to outside contractors where this offers simplicity, cost savings or better access to ‘on tap’ expertise.
When the activities are outsourced to an overseas provider, often to be performed in a different manner, redundancies inevitably result. There has been no let-up in this trend. It remains to be seen how the stricter regime of employment law, created through the measures in the Employment Rights Act, will affect this.
How TWM can help
At TWM, our Employment Law team advises employers on redundancy planning, consultation obligations and the legal implications of restructuring. We help businesses understand and comply with their responsibilities, manage change effectively and reduce the risk of costly disputes – particularly as the new Employment Rights Bill approaches.
If you are considering redundancies, restructuring or contractual changes, early advice can be critical – please contact our Employment Law team who will be happy to assist you.