Increase In Collective Redundancy Protective Award And Consultation On Thresholds For Obligations

Where an employer proposes to make 20 or more employees redundant within a 90-day period they must inform and consult on the collective redundancies. Failure to do so can result in an employment tribunal making a protective award in favour of affected employees.

What has changed?

From April 6, the maximum protective award for failing to collectively inform and consult on a collective redundancy process has doubled from 90 to a maximum of 180 days' gross pay and applies to employees dismissed on or after that date.

Considerations for employers

A protective award is a penalty imposed on the employer for non-compliance with collective consultation obligations. As such a failure to comply could now be significantly more expensive, employers should ensure HR and managers are properly trained in collective consultation requirements. These which include any election process, provision of information, and dialogue with representatives and employees.

Threshold requirement which triggers collective redundancy process

What's changing and why?

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 allows employers to circumvent the threshold by spreading redundancies across multiple sites, without triggering the requirement for a collective redundancy process.

During 2027, in addition to this minimum threshold, 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. This the Government's preferred method as this covers most organizations who are covered by the current law on collective redundancies and operate out of one location.

Option two: a tiered approach based on the number of employees in the organisation and number of proposed redundancies so sets different thresholds for different sizes.

Other suggestions include where a redundancy proposal affects a percentage (to be determined) of the employer’s total employees across the organisation but 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.

Also under consultation is 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 e.g. monthly, quarterly, or annually.

Practical impact on employers: next steps

Single-site employers

Their obligations will remain unchanged. The trigger for the collective redundancy process will remain unchanged, at 20 or more employees at the establishment, or site.

Multi-site employers

Rather than assessing risk on site-by-site basis, such employers will need to track proposed redundancies centrally, to determine whether, on a rolling 90-day period, 20 or more redundancies are proposed across their organization. To ensure compliance they will need to:

• centrally record the numbers, locations and timescale of proposed redundancies to assess risk of collective redundancy process being triggered

• consider capture, storage and retrieval of data

• be cautious in seeking to stagger redundancies to avoid collective consultation given increase in protective award

• review training to HR and managers on redundancy processes

The Government's consultation closed on May 21. Prior to implementation it proposes to produce a Code of Practice on collective redundancy obligations and a consultation on it in 2026.