Samantha Mackie

Unfortunately, with the clock steadily ticking down to the implementation of the new Employment Rights Bill (ERB), the options available to many university boards are soon likely to become yet more complex and onerous.

The Employment Rights Bill

It’s anticipated that the Employment Rights Bill will receive royal assent in July 2025, and while provisions are largely expected to come into force in 2026, it has been predicted that the early reforms will be implemented from October 2025. A changing ERB landscape will present new challenges for financially pressed universities.

For example, a recently proposed amendment to the ERB seeks to introduce a second, company-wide redundancy consultation threshold. Currently organising employees within separate establishments can avoid the need for collective consultation whereas the most recent proposals require employers to take into account the number of contemplated redundancies across the entire organisation. Quite simply, this will make it far less likely that universities contemplating redundancies can avoid triggering collective consultation requirements.

Employers beware. Any procedural misstep under the new (ERB) regime could double a potential protective award to 180 days’ pay (approximately six months) per employee. The potential liability for universities is eyewatering and would only contribute further to the institutions’ financial hardship.

Collective bargaining and collective redundancy 

With the threat of redundancies at both the University of Edinburgh and the University of Dundee, trade unions have a pivotal role to play in exploring solutions. However, there is no legal requirement for the universities to continue negotiating until an agreement is reached. If an employer considers that it has exhausted its attempts to mitigate redundancies via collective bargaining arrangements, it’s not precluded from beginning a collective redundancy consultation. However, as the University of Edinburgh is currently experiencing, it would be wise to tread carefully. There is a real risk that if negotiations break down, employees could decide to ballot in favour of industrial action. Industrial action will not improve the universities financial position, but it will mount pressure on its senior leadership to revisit alternative solutions. 

That said, collective bargaining can be a powerful tool, though its effectiveness is influenced by factors like timescales and the extent of financial loss that is to be recovered. Notably, the University of Edinburgh has publicly committed to liaison with its joint trade unions. However, the University of Dundee’s widely reported dire financial position means it could be counterintuitive to prevent ongoing monetary losses if that university opted to collectively bargain over a longer period. Consequently, as the University of Dundee is very unlikely to avoid making compulsory redundancies, it’s reported to be more focused on collective redundancy consultation.

Employers should be prepared to strike a balance between the processes of collective bargaining and collective redundancy. The approach of the University of Edinburgh may avoid industrial action and preserve the reputation of the institutions, even when cost cutting takes precedence. The severity of the University of Dundee’s situation means delaying consultation in favour of collective bargaining may compromise the future of more employees if the university fails to stem its losses.

It’s a fact that public sector employers face additional layers of red tape when contemplating redundancies, due to their no compulsory redundancy policies. That is not to say that redundancies would be unlawful; there is no legal prohibition on making public sector employees redundant. It is a matter of policy. 

Indeed, whether the universities’ proposals fall within the remit of making compulsory redundancies is a matter for the employment tribunal to determine. It would examine the extent that each university explored alternative measures to try and avoid job losses. It has been reported that both University of Edinburgh and University of Dundee have explored alternatives to redundancy measures, with the ‘financial recovery plan’ of the latter including disposal of assets. Notably, the University of Edinburgh launched a voluntary severance scheme on 20 January 2025 as a means to cut overheads. It’s now experiencing union pressure to avoid moving towards a compulsory redundancy process. In the experience of our employment team at Shoosmiths, both approaches are commonly explored by employers who wish to treat redundancy as a last resort. 

Fire, rehire and day one rights

Let’s be clear. The forthcoming ERB proposals will abolish the two-year qualifying period for unfair dismissal protection and introduce immediate protection from the first day of a person’s employment, subject to the introduction of a statutory probationary period. Consequently, this proposal ups the ante for the universities currently in the spotlight due to the sheer number of the employees potentially impacted. Employers must ensure that each employee is invited to carefully planned consultation meetings and that outcomes are only reached following meaningful consultation. 

The ERB fire and rehire proposals have teeth. When introduced, they will almost entirely prohibit the use of dismissal and reengagement unless further education institutions can meet the new strict exceptions test. Seeking to ease financial pressure by cutting contractual hours, salaries, or benefits can have serious consequences as institutions will soon be required to prove that such measures were unavoidable.

Employers (in this case universities) will need to provide evidence of their financial ability to operate as a going concern and demonstrate that any proposed variation in employee terms had the purpose of eliminating, significantly reducing, or mitigating the effects of the challenges. This will be a tall order for many institutions and offer little room for manoeuvre. 

Nevertheless, it’s possible that the institutions will be able to meet the exceptions test, albeit the employment tribunal will still consider whether the dismissals were procedurally and substantively fair in the circumstances. Institutions will not wish to fall short of the stringent ERB provisions. The new protections could render the dismissal automatically unfair, allowing a great pool of employees’ access to an award of up to one year’s salary or £118,223 from 6 April 2025, whichever is less.

The pension question

Given the imminent ERB proposals and the many cost pressures facing the sector, many further education institutions should urgently consider whether financial positions can be improved and redundancies avoided by consulting with staff on their contractual benefits. Once the ERB proposals are fully implemented it will become exceedingly difficult in this respect for the sector to vary contracts of employment under the ERB regime.

Although unwelcome by employees, taking the decision to renegotiate a sizeable defined benefit pension offering could ease the financial pressure that is jeopardising employment. Ultimately, if pension cuts are proposed and not agreed, the ERB vastly restricts an employers’ ability to serve notice under the current contract and seek to reengage employees on less favourable pension terms. However, given the scale of the crisis in some institutions, employees may struggle to reasonably object to proposals if the universities can demonstrate that reducing its pension spending would improve its position and avoid further staff cuts.

Navigating the ERB and financial uncertainty

How the University of Edinburgh and University of Dundee navigate the response from their employees and potentially the employment tribunal is very much a test case which may well influence the approach other academic institutions in Scotland adopt.

Faced with similar financial challenges, we may well see the wider further education sector adopt a cautious approach and fully align with the public sector compulsory redundancy policy, exploring cuts elsewhere to preserve employment. 

However, employers are stuck between a rock and a hard place. The ERB proposals could elongate processes and increase their financial exposure which will likely compound the financial issues they face. Therefore, university boards must remain vigilant, balancing immediate concerns with the ticking ERB clock. It’s not a question of whether the ERB will change the landscape of the FE sector; rather, institutions should consider what steps they can take now to cushion the inevitable impact of the reforms on the sector’s ability to weather its financial crisis.

They would do well to continue exploring alternative means to plug their revenue gap, including considering consulting with staff to reduce contractual enhancements with an eye to saving future jobs and to maintain operations.

Faced with industrial action and the pressing need to reduce costs, the way ahead is tricky for the institutions to navigate. It will not be enough to simply inform employees of proposals, for a consultation is a two-way street that requires consideration be given to employee feedback, including whether counter proposals are viable. The institutions should prioritise working in tandem with their recognised trade unions and communicate transparently to reduce the scope of industrial unrest and tribunal litigation. 

The decisions taken now by the universities may also have far reaching consequences for their sector. Faced with the more stringent ERB measures and the financial consequences that may follow, recruitment in the sector could become markedly slow. Institutions may lean on other measures such as hiring freezes. Future vacancies are likely to be advertised with less attractive packages in a bid to control spending. This could create employment risks elsewhere unless the reasons for implementing any pay differentials with existing employees are suitably justified.

Samantha Mackie is a senior associate at Shoosmiths