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The Employment Rights Act 2025 is introducing significant changes to the collective redundancy framework. While some of the detail is still to be confirmed, the direction of travel is clear: more employers will be required to collectively consult, and the consequences of getting it wrong will be more severe.
What is the current position?
Under the existing regime, employers are required to collectively consult where they propose 20 or more redundancies at one establishment within a 90-day period.
This “single establishment” test has, in practice, allowed employers to structure redundancy exercises across different sites in a way that avoids triggering collective consultation obligations altogether.
However, the risk of non-compliance has already increased. From April 2026, the maximum protective award for failing to collectively consult has doubled from 90 days’ to 180 days’ pay per affected employee, significantly increasing financial exposure for employers.
What is changing?
The Employment Rights Act 2025 will retain the current test, but introduces a new, additional trigger. In future, employers will also need to collectively consult where redundancies reach a specified threshold across the organisation as a whole, even if no individual site meets the 20-employee threshold.
The precise threshold is yet to be set and will be determined by further regulations. However, the policy rationale is clear: to prevent large-scale redundancy programmes from falling outside the collective consultation regime simply because they are spread across multiple locations.
What does this mean for employers?
Although the new organisation-wide threshold is not expected to come into force until 2027, employers should begin factoring it into workforce planning now.
First, the scope for avoiding collective consultation by structuring redundancies across different sites is likely to reduce significantly. Employers will need to consider redundancy numbers across the whole employing entity, rather than looking at individual locations in isolation.
Secondly, this change places a greater emphasis on early-stage planning. Whether collective consultation is required is a threshold question which will shape the timeline of any redundancy exercise. That assessment will become more complex where multiple teams or sites are involved.
Finally, the increased protective award underlines the importance of getting the process right. Collective consultation is not simply an administrative step – it requires meaningful engagement with employee representatives about the proposals, including ways to avoid redundancies, reduce numbers, and mitigate their impact.
What should employers be doing now?
Our key tips are:
- Train managers: ensure those leading restructures understand the distinction between collective and individual consultation, and that collective consultation may be triggered more easily once the new organisation‑wide test comes into force
- Stress-test your process: sense-check whether your current approach would withstand scrutiny in a scenario where consultation is required across multiple sites or teams, and ensure the focus remains on genuine consultation and mitigation
- Keep records: maintain a clear audit trail of how redundancy numbers have been assessed across the organisation and how consultation has been conducted, particularly given the increased financial exposure
- Take advice early: particularly where redundancies are being considered across different parts of the business, as the new rules will make the threshold analysis more complex and fact-sensitive