The UK Government is set to introduce significant changes to collective redundancy laws as part of the forthcoming Employment Rights Bill. Aimed at strengthening employee protections, the proposed reforms will expand the scope of mandatory consultation requirements beyond individual workplaces to include redundancies across entire organisations. With increased penalties for non-compliance and a potential doubling of consultation periods, employers must review their redundancy strategies and prepare for a more rigorous regulatory environment.
Current position
A collective redundancy exists where an employer proposes to make redundant 20 or more employees at one establishment within a period of 90 days or less. An ‘establishment’ broadly means a site or workplace. The employer must consult with representatives of the affected employees. Consultation must begin ‘in good time’ and at least 30 days before the first dismissal is proposed. This requirement is increased to a minimum of 45 days if the proposal is to dismiss 100 or more employees. The relevant timescale also applies to the employer’s obligation to notify the Secretary of State of its redundancy plans, using the HR1 form.
Failure to undertake effective consultation may result in a ‘protective award’ being made against an employer in the Employment Tribunal of up to 90 days’ pay per employee.
The Employment Rights Bill proposals
Under the current legislation, an ‘establishment’ means one workplace or site. The Employment Rights Bill looks to strengthen collective redundancy rights by requiring consultation based on a higher threshold across the entire organisation, not just a single establishment.
From 2027, a collective redundancy consultation will be required where either:
- The employer proposes 20 or more redundancies at one establishment (which is the current position); or
- The employer proposes a number of redundancies across the organisation as a whole, irrespective of where they occur. This new ‘threshold’ number will be defined in regulations in due course. It has previously been indicated as a figure greater than 20 but could also be based on a percentage.
This means that statutory collective consultation could be triggered by small numbers of unconnected redundancies across different sites and workplaces if they occur within a rolling 90-day period. However, recent amendments have confirmed that employers will not need to consult all the employee representatives together or try to reach the same agreement with all of them.
The longer consultation period of 45 days that applies when 100 or more redundancies are proposed could also be triggered more often when redundancies across different sites and workplaces are calculated together.
Penalties are rising
From April 2026, the maximum award that can be sanctioned by an Employment Tribunal in relation to employers failing to collectively consult on redundancies will increase from 90 to 180 days’ pay per employee which will significantly increase the cost of failure to comply with the legislation.
It is expected that the Government will soon consult on whether to double the minimum consultation period from 45 to 90 days when an employer is proposing to dismiss 100 or more employees. Official guidance for employers on fulfilling their collective redundancy obligations is also being prepared and will be issued in due course.
Practical considerations for employers
The changes proposed in the Bill are likely to result in more collective consultation involving employee representatives and trade unions. Employers should proactively consider how to monitor the new threshold (when implemented) and manage any such increase through their internal policies and practices. This is even more important considering the doubling of the maximum protective award which will introduce significant financial risks for failing to comply with the collective consultation requirements.
An employer with numerous sites at which redundancies can take place will need to consider a change of approach as small-scale redundancy proposals across multiple sites does not typically trigger collective consultation. When the Bill comes into force, such redundancy plans may meet the new threshold which will mean the duty to consult is triggered. However, there are still uncertainties about how the threshold will be defined and whether unrelated redundancies will be pooled together.
Employers should act now to collate their redundancy proposals across the organisation on a rolling basis which will reduce the risk of non-compliance when the regulations are eventually implemented.
Get in touch today to speak to one of our Employment Team about your redundancy obligations and how to protect your business from risk.
