Collective Redundancies

What are collective redundancies?

A collective redundancy exists where an employer proposes to make redundant 20 or more employees at one establishment within a period of 90 days or less.

What are the legal obligations?

Where proposing to make collective redundancies, the employer must be careful to comply with specific legal obligations which are in place to try and avoid or reduce the impact that collective redundancies will have on individual employees.

The legal requirements for employers can be complex and, where there has been a failure to comply, Employment Tribunals may issue penalties depending on the seriousness of the employer’s default. These are referred to as ‘Protective Awards’. The maximum penalty is up to 90 days’ gross pay for each dismissed employee. The financial impact on employers can therefore be significant.

The key requirements relate to notification and consultation as follows.

Notification

The employer is obliged to notify the Secretary of State of its intention.

Where employees are aboard ships registered outside of Great Britain, notification must be made to the authority of the state where the ship is registered rather than the Secretary of State.

Consultation

The employer must consult on the proposal with representatives of the affected employees.

The consultation must be undertaken with a view to reaching agreement on ways and means of avoiding dismissals.

Once consultation has started, the dismissals cannot take effect for a minimum period of time (this may be 45 days where proposing to dismiss 100 or more employees, or 30 days where proposing to dismiss between 20 and 99 employees).

What’s changing?

In Winter 2025 and early 2026: Government consultation is expected on collective redundancy consultation.

In April 2026: The Protective Award will be increased from a maximum of 90 days’ gross pay to a new maximum of 180 days’ gross pay.

The obligation to notify the Secretary of State in cases of collective redundancy will also be extended to include employees who work on ships operating regular international services from ports in Great Britain, or on any service operating between Great Britain and another place in the UK.

In 2027: The Employment Rights Act 2025 (‘ERA 2025’) proposes to make changes to when collective redundancy obligations will be triggered.

Not only will the collective redundancy obligations continue to be triggered where there are a proposed 20 (or more) redundancies at one establishment, but they will also be triggered where a ‘threshold’ number of redundancies are proposed across the employer’s organisation.

The Government proposes to set the ‘threshold number’ following consultation.

What does this mean?

The Government has set out that, in making these changes, it is seeking to strengthen and protect the rights of those who may be affected by large-scale redundancies. By doubling the financial penalty which may be issued, it hopes to address scenarios where employers ‘cynically choose to ignore their legal obligations’.

However, the changes pose a number of risks to employers, even those with every intention of acting in good faith.

The introduction of a new collective redundancy-trigger, where a certain number of redundancies are proposed across different establishments within one organisation, will require employers to look far more carefully at what is taking place at different sites within the organisation. If they do not, they risk being caught up in a collective redundancy situation without even knowing. This could be the case even where the employer proposes to make redundancies within their establishment which fall far below the current threshold of 20.

If you would like to discuss anything mentioned in this blog please contact a member of the Employment team.

To find out what other aspects of employment law are affected by the Employment Rights Act, read our blog “The Employment Rights Act – When to expect change”.

We publish blogs and social media posts to give a general overview of legal and commercial issues, relevant at the time of publication, which we hope you will find interesting. Please note that legal rules often change depending on the specific facts of a situation. The law also changes over time following changes in legislation or new court cases. We do not actively update our blogs or posts once they are published to reflect changes in the law.