ERA reforms in depth: Collective redundancies

The cap on protective awards is expected to increase in April 2026.

The broadening of the circumstances in which collective consultation will be triggered will be set out in separate regulations. These regulations are expected to come into force in 2027, with consultation expected to start in early 2026.

Current position

At present, the duty to consult collectively where redundancies are proposed is triggered when an employer is proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days. The same trigger applies to notifying the Secretary of State of proposed redundancies by way of an HR1 form.

The current cap on the protective award (the amount that can be awarded where an employer fails to comply with its obligations to inform and consult employees) is 90 days’ uncapped pay per employee.

What is changing?

In one of the most imminent changes from the Act to come into effect, the cap on the protective award is set to be increased to 180 days’ uncapped pay per employee.

The reforms to the collective consultation trigger are more complex, as outlined below:

• The first draft of the Employment Rights Bill sought to remove the ‘at one establishment’ requirement altogether, meaning that all proposed redundancies across the employer’s business would have been aggregated when assessing whether the collective consultation obligation was triggered. However, during the progress of the Bill through Parliament, the government amended these provisions.
• Under the final version of the now Act, collective consultation will be required and an HR1 form submitted when an employer proposes within a 90-day period:
  • 20 or more redundancies ‘at one establishment’ or
  • a threshold number of redundancies, without the ‘at one establishment’ requirement.
• The threshold number of redundancies (which cannot be lower than 20) is still to be determined and may be a specified number, a specified percentage of the employer’s employees or a combination of both. The detail on how the additional trigger will operate (including what the threshold number or percentage will be) is set to be included in secondary legislation. This detail is likely to be covered in the early 2026 consultation mentioned above.
• Once the additional trigger is in force, an employer will need to count all redundancies being proposed, within a rolling 90-day period, across its whole business as opposed to at individual sites, to determine if the obligation to collectively consult is triggered.
• The employer will not be required to consult all representatives together or reach the same agreement with all representatives.

Whilst the government has decided not to make interim relief available for claims for failure to inform and consult, it intends to gather further views in 2025 on strengthening the collective redundancy framework. This may include consultation on the minimum consultation period that would apply when an employer is proposing 100 or more dismissals – that minimum period is currently 45 days and the government has suggested increasing it to 90 days.

The consequences of breach (of both the duty to consult and the duty to notify the Secretary of State) can already be significant and will become more severe once the cap on protective awards is increased from 90 to 180 days uncapped pay per affected employee. This will underline the importance of getting the process right. As a pre-emptive step, employers may want to consider training for their line managers, HR teams and leaders to ensure that they are aware of the legal and procedural obligations on an employer when proposing redundancies.

Once the new trigger for collective consultation is in force (expected to be 2027), the duty to collectively consult will be triggered more frequently. Although we do not yet know what the threshold number or percentage will be, employers with multiple sites should be thinking now about how they can better track and record redundancies across their business on a rolling basis. Without such systems in place, the change would increase the risk of inadvertent breaches even if robust and otherwise generally fair (non-collective) redundancy exercises have been carried out at individual sites.