Threshold thinking – get ready for the new trigger for collective redundancy consultation

Last week, the government launched consultation into a significant change contained in the Employment Rights Act 2025 – the introduction of a new threshold for triggering collective redundancy obligations. With dipping employer confidence, seismic AI-related changes to workforce requirements and rising employment costs all repeatedly hitting the headlines, multi-site employers will need to keep a close eye on the new threshold and start preparing soon for its implementation next year. 

What is the new trigger?

As a quick recap, the duty to collectively consult is currently triggered when an employer is proposing 20 or more redundancies “at one establishment” within a period of 90 days. Where the employer is proposing 20-99 redundancies, consultation must start at least 30 days before the first dismissal. Where the employer proposes 100 or more redundancies, consultation must start at least 45 days before the first dismissal.

The first draft of the then Employment Rights Bill sought to remove the “at one establishment” requirement altogether, which would have meant all proposed redundancies across an employer’s business within 90 days would have been aggregated when assessing whether collective consultation obligations were to kick in. However, this position was watered down after significant pushback from industry bodies. 

The final version of ERA 2025 instead includes a provision which allows the government to introduce a new trigger for collective consultation which will operate in addition to the existing threshold. Once this change is implemented (at some point next year), an employer will be required to collectively consult affected employees (and notify the Secretary of State of proposed redundancies via an HR1 form) where within 90 days:

1. 20 or more redundancies are proposed at one establishment (which, in most cases, is one site); or

2. a threshold number or percentage of redundancies is proposed across the employer’s business (referred to in the consultation as the “organisation-wide threshold”). 

As with the existing threshold (A. above), when assessing whether the new threshold number (B. above) has been reached, only proposed redundancies within the same employing entity will be counted. 

Why is the new trigger being introduced?

The organisation-wide threshold is designed to combat the imbalance of protection which may occur where large numbers of proposed redundancies are dispersed across a multi-site business. In that scenario, those at larger sites often benefit from collective consultation protections (or an entitlement to a protective award for failure to inform and consult, if the employer does not properly consult) and those at smaller sites with fewer than 20 proposed redundancies have no such protection or entitlement. 

This is exactly what happened after the collapse of Woolworths in 2008 - thousands of employees were made redundant after the business went into administration and only those at stores with 20 or more employees were entitled to protective awards for failure to inform and consult as there was no obligation to collectively consult at the smaller stores. Employees affected by exactly the same redundancy scenario were therefore left in significantly different positions. At the time of the Woolworths legal battle, the maximum protective award for failure to inform and consult was 90 days’ actual pay but, from April this year, the maximum protective award is set to double to 180 days’ actual pay, meaning that the potential imbalance of protection is set to widen even further. 

The solution of two separate thresholds (one ’establishment’-based and one organisation-wide) is aimed at reducing that disparity of treatment whilst also setting clear parameters so that employers, unions and employees know when the obligations are triggered. How the new organisation-wide threshold will play out in the Woolworths-type example is relatively clear but what of a more complex situation? For example, a scenario where there are a number of separate small restructuring exercises going on across a diverse business, with very different reasons for any proposed redundancies often with meaningful and effective consultation happening at an individual, local level in relation to each exercise. 

When the government’s proposal was to scrap the “at one establishment” requirement altogether (meaning the trigger for consultation would have been 20 or more proposed redundancies anywhere across the employer’s business within 90 days), questions around how an employer could effectively consult and how it would avoid inadvertent breach in this type of scenario abounded. Since the government’s change of tack, a lot hinges on how the new organisation-wide threshold will be measured and what level it will be set at. In the consultation launched last week, the government is weighing up just that. 

What options is the government considering?

The consultation outlines options ranging from a fixed number threshold, a percentage of the total number of employees employed by the employer, a tiered approach with different thresholds applying to employers of different sizes and a combination of these approaches. The government’s clear preference is for the threshold to be a fixed number that would apply equally to all employers, with that number set high enough to avoid large employers constantly consulting. With that last point in mind, the proposed fixed number options that the government is weighing up are 250, 500, 750 or 1,000 proposed redundancies. 

If the government were to implement its preferred option of a fixed number no lower than 250, this would mean that collective consultation for any redundancy exercise that triggers the organisation-wide threshold would need to start at least 45 days prior to the first dismissal (in line with the minimum timeframes outlined above). 

How will this apply in practice?

For some centrally managed restructuring exercises, it may be relatively simple for the employer to keep track of the numbers proposed within each employing entity and at each site. This kind of data will likely form part of the business rationale and other planning documentation so project leaders within Legal and HR/People teams should have early visibility of whether the site-based or organisation-wide threshold is likely to be met. This seems to be the type of scenario that the consultation is geared towards, particularly with its multiple references to large numbers of proposed redundancies dispersed across an organisation. 

As I have mentioned above, however, there are situations in which it could be more difficult for employers to monitor. For example, if an organisation employs all employees under a single employing entity, but operations are run as totally distinct arms or business lines. In this situation, if the left hand does not talk to the right, there is a real risk of an inadvertent breach of collective consultation obligations. 

The new trigger may also be tricky where managers or leaders at each site are given autonomy to carry out people management, including small-scale redundancy exercises, without support from the centre. 

What steps can you take to prepare?

With the consultation set to close on 21 May 2026 and a government response to follow in the months after that, it will be a little while yet before employers will know for certain what the new threshold will be. If the new threshold is set at the higher level of 1,000 proposed redundancies, this would of course affect a smaller number of employers and restructuring exercises. If, however, the threshold is set at the lower level of 250 proposed redundancies, many more employers will be affected by this reform. 

If your organisation has multiple sites, it is worth starting your preparations for the new threshold sooner rather than later. You may want to:

• carry out an audit of your workforce to identify which entity your staff are employed by. Given proposed redundancies are assessed, for the purposes of collective consultation, on an entity-by-entity basis, it is important to be able to identify who the employing entity is in each case. Sometimes this is straightforward, but sometimes it is more complex for large businesses comprising a number of group companies. 

• review the mechanisms that you have in place to track and record proposed redundancies at site level and across each employing entity. 

• consider how those mechanisms will be kept up to date on an ongoing basis to assess whether the threshold has been, or will be, met over a rolling 90-day period. How that rolling period works for staggered redundancies can be tricky – my colleague Huw Cooke gave some thought to this in his recent blog post following on from the Micro Focus v Mildenhall EAT decision. 

• check that your tracking mechanisms record where a collective consultation exercise has begun and which redundancies are covered by that exercise. The consultation document explains that where an employer has begun collective consultation in relation to proposed redundancies affecting one pocket of employees and then goes on to propose further redundancies, it will only need to undertake collective consultation for that second batch of redundancies where those newly proposed redundancies meet either the site-based or organisation-wide threshold in their own right. It is therefore crucial to record not just the numbers of proposed redundancies at each site and within each employing entity but which of those proposed redundancies are covered by any collective consultation exercise that you have carried out or are carrying out. 

Need support navigating this change? We have been advising employers across a wide range of sectors on the implications of the Employment Rights Act 2025. If we can help your organisation, please get in touch. 

Further detail on these reforms and the Act more widely is available on our Employment Rights Act hub.