Collective Redundancy Reform: What Employers and HR Need to Know

The Government has launched a consultation under the Employment Rights Act 2025 which could materially reshape how employers approach larger-scale redundancy exercises.

Currently, collective consultation obligations arise where an employer proposes 20 or more redundancies at one “establishment” within a 90-day period. In practice, this means that large employers can avoid triggering consultation by spreading redundancies across multiple “establishments”. However, the Government considers this to be inconsistent with ensuring fair workforce consultation.

The consultation now introduces a further trigger for collective consultation, which is based on redundancies across the entire organisation, not just one establishment. However it’s important to note that the current trigger of “20 or more at one establishment” will remain but a second threshold which is business-wide will apply alongside. This may have the effect of requiring employers to consult on redundancy proposals where individual sites have less than 20 redundancies but the total redundancies across the organisation as a whole meets the new threshold.

So, what might the new threshold be?

The Government is consulting on how to set this new trigger. The key options include:

1. A single fixed number

• • Reports suggest this could be in the range of 250 to 1,000 redundancies across the business as a whole, which appears to be the preferred approach at present due to its simplicity.

2. A percentage-based threshold

• • This approach would trigger collective consultation requirements where a particular percentage of the workforce may be made redundant. However, the concern with this approach is that it could disproportionately affect smaller employers.

3. A tiered system

• • This is likely to involve different thresholds depending on the size of the employer and could potentially involve a combination of fixed numbers and percentages.

None of the above approaches are without complexity, particularly for multi-site or seasonal workforces.

One the key issues to be considered is how workforce size will be calculated when assessing whether the new threshold is met. The consultation will explore different methods including, average headcount over a reference period, headcount at the time redundancies are proposed or fixed calculations at fixed intervals. For employers, it’s going to be crucial to establish employment status and monitor headcount.

Employers and HR need to be aware of the increased legal risk. Where collective consultation obligations are not complied with employees can claim a protective award. Current this is 90 days pay but will increase to 180 days pay from April 2026. The stakes are rising for employers with litigation, financial and reputational risk.

The consultation closes on 21st May 2026 with an expectation that the new rules will be implemented in 2027.

Employers should take steps to prepare now and key steps are likely to include ensuring clarity on employment status and accurate headcount information as well as having a central oversight of redundancy proposals across the business as a whole.