The rules governing collective consultation have not escaped the government’s Employment Rights Act 2025 employment law ‘revolution’.
As outlined below, several changes to the existing regime will make it more important than ever for any employer proposing to make large scale redundancies to make sure they comply with their obligations on collective consultation.
Many employers will already be aware that from 6 April 2026, the maximum award for a failure to collectively consult on redundancies increased from a 90day protective award to 180 days; and will be conscious that getting this process wrong is therefore a significant financial risk. However, there are further changes to come which will also significantly affect how and when collective consultation needs to take place.
Reminder of the basics
Currently, collective consultation is required where employers propose to make 20 or more redundancies at one establishment within a 90-day period and the Secretary of State must also be notified via an HR1 form. The timeframe for collective consultation is a minimum of 30 days before the first dismissal takes effect (where there are proposed to be between 20 and 99 employees dismissed) or 45 days if the proposal is to dismiss 100 or more employees.
Increase to ‘protective award’ compensation
Previously, if employers failed to carry out their collective consultation duties, an employee could bring a claim and the maximum ‘protective award’ compensation was 90 days’ pay. Some larger employers would factor in that pay award to the cost of their redundancies and pay it to employees upfront in order to avoid the need to go through collective consultation. As a result, the government indicated that it wanted to clamp down on this practice and encourage employers to comply with their collective consultation obligations; consequently, as of 6 April 2026, the maximum award has been increased to 180 days’ pay. it is
Change to the threshold for collective consultation being required: where has the government landed?
At the moment, collective consultation obligations kick in when there are 20 or more redundancies at ‘one establishment’.
Originally, the government proposed that the ERA2025 would remove the ‘one establishment’ part of the threshold entirely, which would have meant that collective consultation was required when a company was proposing 20 or more redundancies within a 90-day period, wherever the individuals were based within the organisation.
Large multi-site employers were concerned about this and the practicality of it, which they feared would place them in a state of ‘perpetual consultation’. Therefore, the government revised its position and the ERA ultimately provided that collective consultation is required where an employer is proposing to make redundant, within a period of 90 day or less:
20 or more employees at one establishment; or
At least the ‘threshold’ number of employees across the whole business.
Despite a lengthy and detailed consultation between February and May 2026, the threshold number is yet to be determined, with the government’s response to the consultation (and the draft regulations that will be needed to implement the new threshold provisions) still awaited. The current implementation timeline indicates only that the changes are planned to come into force next year.
Consequences of the removal of the ‘one establishment’ threshold
Wherever the additional threshold is set, it will mean that employers have to be prepared to look more closely at the total number of redundancies across the whole business and will no longer be able to rely on the fact that the proposals are at different establishments. These changes are likely to mean that collective consultation is required more regularly, albeit the extent of the impact for individual employers will depend on the ‘threshold’ number that is ultimately set by the Government.
It’s worth noting that, where there are different redundancy / consultation processes proposed across an organisation, the obligations will not require an employer to consult all appropriate representatives together, nor to undertake consultation with a view to reaching the same agreement with all representatives, although in some circumstances, an employer might find that beneficial. However, the flexibility to take either approach recognises that employers may sometimes be consulting with very different groups of employees across various establishments and therefore the discussions and agreements will need to vary.
The trigger for the obligation to notify the Secretary of State will continue be aligned with the trigger for collective consultation and so may also be required more frequently, i.e. when there are proposals to make redundant the new threshold number of employees across the whole business.
When will the threshold changes happen?
Whilst the changes to the protective pay award are already in force, the remainder of the changes are scheduled to be implemented in 2027 and we anticipate the exact date being announced when the government’s response to the latest consultation and draft regulations are published.
If you need any help with making sure you comply with your obligations on collective consultation, please do get in touch.
