Redundancy Collective Consultation

Policy

The Government has previously indicated that it wishes to strengthen the rules regarding the collective redundancy framework.

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. One of the biggest changes introduced by the original draft of Employment Rights Bill was to remove the at ‘one establishment’ component from the trigger, meaning that the threshold to trigger such obligations would be assessed by looking at the number of proposed dismissals across the employer as a whole.

This proposal had been criticised by business groups on the basis that it would be difficult to manage in practice, as employers would need to keep track of unrelated redundancies across different sites and collective consultation redundancy obligations would be triggered more frequently.

In response, the Government made some changes to the Employment Rights Bill on 5 March 2025. Under the new proposals, 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
• at least the threshold number of employees (what that threshold is will be set out in regulations) – this will likely be a threshold that applies across the business.

We do not yet 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.

This change will hopefully mean that the obligation to collectively consult will not be triggered as often as would have been the case if the one-establishment part of the test had been removed entirely. However, employers with multiple sites will still 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 requires central or intra-site coordination.

Additional amendments to the Employment Rights Bill were also made on 5 March 2025 to the collective consultation obligations 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 (and as is currently the case the amount of notice required will depend on the number of proposed dismissals).
• 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.

Remedies/penalties

The Government launched a Consultation last year on increasing protective awards and introducing interim relief for an employer’s failure to comply with the collective redundancy consultation obligations. The Government published its response and has:

• Amended the Employment Rights Bill to double the maximum protective award that an employment tribunal could make from 90 days to 180 days gross pay per affected employee. The rationale behind this increase is to deter employers from non-compliance with the obligations and from ‘buying out’ the claims.
• Confirmed that it will not be taking forward its proposal to introduce interim relief. Multiple responses were concerned that this would put increased pressure on employment tribunals, employees, and employers.
• Promised to issue further guidance for employers on collective redundancy consultation processes, in recognition of the complexity of the regime.
• Confirmed that it intends to gather further views on strengthening the collective redundancy framework in 2025. The consultation previously 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 about-turn on the removal of the establishment test should be welcomed by employers, depending of course on where the new threshold for triggering consultation on multi-stie redundancies is set. Detailed guidance will also be welcomed.

However, clearly the increased protective awards will likely be a concern for employers, particularly given the complexity of the current regime. 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 Employment Rights Bill.

Regulations will be required to determine the new threshold test for redundancies across more than one establishment. Implementation is currently anticipated no earlier than 2026, though firm details on timing have not yet been provided.

Further consultation is also promised to gather views on strengthening the collective redundancy framework this year – so any changes proposed in respect of this potentially could come later still.