From 6 April, the maximum protective award for failing to collectively consult on a collective redundancy process will double from 90 to 180 days' pay, applying to employees dismissed on or after that date.
Coming into force during 2027 are new requirements applying to organisations proposing to make collective redundancies. On 26 February the Government published a consultation seeking views on the level to set the threshold for triggering collective redundancy obligations and methods of calculating it. This closes on 21 May.
Currently the collective redundancy process applies when employers propose to make 20 or more redundancies at one "establishment", broadly a site, within a 90-day period. This narrow definition allowed employers to circumvent the threshold by spreading redundancies across multiple sites, without triggering the requirement for a collective redundancy process.
While the minimum threshold requirement of 20 or more redundancies at one establishment will remain, the Employment Rights Act 2025 will introduce, alongside it, an additional organisation-wide trigger. The Government is consulting on two possible options on the level and methods by which the new organisation-wide threshold for triggering collective redundancy obligations might be set.
Option one: using a single fixed number of proposed redundancies in the range of 250 to 1000 across the whole organisation.
Option two: a tiered approach based on the number of employees in the organisation and number of proposed redundancies.
Option one is the Government's preferred method. This is because 76% of organisations with between 20 and 250 employees only operate out of a single establishment (so already have to fulfil collective redundancy obligations). It also allows the Government to apply one fixed number to all employers, regardless of their size.
Option two sets different thresholds for different sizes of employers. This would make the threshold numbers more proportionate to the size of the employer. It means that an estimated 15.9 million (or 88% of) employees could potentially be in scope of the new threshold because they work for an employer with multiple sites and at least 250 employees.
Views are additionally sought on collective redundancy obligations being triggered when the proposal affects a percentage (to be determined) of the employer’s total employees across the organisation. The final method under consideration is to use both fixed numbers and a percentage to tier the threshold. However, the Government is concerned that trade unions and employees may find it more difficult to understand when these collective redundancy consultation (and notification) obligations arise and could lead to unnecessary disputes and add additional burdens on employers.
The Government is also seeking views on when employers calculate the number of employees who could be affected by a proposal. This might be over a period of months prior to a particular date, or points when redundancies proposed, or on a regular basis eg monthly, quarterly, or annually. Whichever method is selected, the proposal will need approval from Parliament before taking effect.
