Redundancy Collective Consultation

The Government has previously indicated that it wishes to strengthen the rules regarding the collective redundancy framework. The ERA 2025 will make two main changes to collective redundancy consultation.

Trigger for collective redundancy consultation obligations

Presently, collective redundancy consultation (and the requirement to give advance notice to the Government via a form HR1) is triggered where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

The ERA 2025 amends this, so that collective redundancy consultation obligations will be triggered when an employer is proposing to dismiss as redundant within a period of 90 days or less either:

• 20 or more employees at one establishment (as is currently the case); or
• A ‘threshold number of employees’ (threshold will be set out in regulations) – across the business.

We do not know what this new alternative threshold number of employee dismissals will be. This could be set at either a specified number or a specified percentage of employees or a number that is the highest or lowest of two or more numbers, however it must not be lower than 20 employees. The Government’s intention is seemingly that where redundancies are proposed across an employer at more than one establishment, then this threshold will be higher than redundancies proposed at one establishment.

The ERA 2025 will also make additional changes to the current law in respect of collective redundancies to align with the above changes, including:

• Ensuring the trigger to notify the Secretary of State of the proposed dismissals, via a form HR1 is aligned to the new test for collective consultation.
• Clarification that the employer is not required to consult all the appropriate representatives together or undertake collective consultation with a view to reaching the same agreement with all the appropriate representatives – this is being introduced to try to alleviate concerns from employers about how to manage their collective consultation obligations with representatives when they are making unrelated redundancies across multiple sites.
• Minor changes to the information requirements to be provided to employee representatives.

Employers with multiple sites will have to engage in collective consultation if they are proposing redundancies across different sites within a 90-day period under the new threshold test. Employers will therefore need a mechanism to keep track of proposed redundancies across different sites, which may be administratively burdensome and will require central or intra-site coordination.

Penalties

Following a consultation on the issue in 2024, the ERA 2025 will double the maximum protective award that an employment tribunal could make from 90 days to 180 days gross pay per affected employee. The rationale for this is to deter employers from non-compliance with the obligations and from ‘buying out’ the claims.

As part of the same consultation, the Government also confirmed in its response that it:

• Is not taking forward its proposal to introduce interim relief.
• Will issue further guidance for employers on collective redundancy consultation processes, in recognition of the complexity of the regime.
• Intends to gather further views on strengthening the collective redundancy framework in 2025 (although this is still awaited). The consultation noted that the Government may consult in future on doubling the minimum consultation period when an employer is proposing to dismiss 100 or more employees from 45 to 90 days.

The increased protective awards will likely be a concern for employers, particularly given the complexity of the current regime and because this is an earlier reform in the Government’s timetable. Future Government guidance must be sufficiently detailed to address the regime’s complexities to assuage employers’ concerns that they will not be excessively penalised with increased protective awards for only inadvertent or minor breaches.

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Timing and developments

Included in the ERA 2025.  

Regulations will be required to determine the new threshold test for redundancies across more than one establishment.  

Consultation has been promised on changes to the collective consultation threshold in Winter 2025/early 2026. This is still awaited.

The Government’s updated timeline indicates that the measures relating to collective redundancy consultation will take effect as follows: 

• 6 April 2026 – doubling the collective redundancy protection award from 90 to 180 days. Note interestingly that the recently published Government Guidance for Businesses says that this will apply to “dismissals which happen on or after 6 April”. If this is reflected in the commencement regulations, this will affect collective redundancy proposals underway prior to this date.
• In 2027 (although a specific date is not provided) – collective redundancy consultation threshold.