Redundancy and collective consultation under the Employment Rights Act 2025

At present, collective consultation is triggered when an employer proposes to dismiss as redundant 20 or more employees at one establishment within a 90-day period. That “establishment-based” threshold remains the starting point for employers when considering redundancies and whether the duty to collectively consult with employee representatives will be triggered.

With the Employment Rights Act 2025 (the Act) receiving Royal Assent recently, that position is about to change.

The Act introduces an additional, company-wide threshold, so consultation will be required if either:

• The existing “20 at one establishment in 90 days” test is met; or
• the new employer-wide threshold is reached by aggregating proposed redundancies across the company, regardless of location.

The precise level of the new employer-wide threshold will be set by future regulations but is expected to commence in 2027, following consultation and secondary legislation. Options under consideration include a percentage-based test and a higher absolute number.

By way of example, if an employer has four sites across the UK and proposes to make six redundancies at each site over a rolling 90-day period, currently there is no duty to collectively consult because no single site reaches 20 proposed redundancies. However, the new employer-wide approach aggregates all proposed redundancies in the same 90-day window. If the future regulations retain the threshold at 20, collective consultation would be required even though no site individually reached 20. If the threshold is set as a percentage of the total workforce, the total proposed dismissals in the window would be compared against that percentage.

Two related changes will, however, take effect from April 2026:

• The maximum protective award for failure to consult will double from 90 to 180 days’ pay; and
• legislation will clarify that multi-site employers may consult separate representative groups rather than one combined forum.

In practice, this means there is an increased risk of multi-site employers triggering the duty to collectively consult where previously it was not required, thereby exposing themselves to potential liability for the increased protective award if the process is not followed correctly.

Employers operating more than one site should start reviewing their redundancy procedures now to ensure that employer-wide counting, alongside establishment-level counting, is carried out when considering redundancies, and that they are prepared for the changes introduced by the Act when they come into force.

If you have any questions about the changes to collective consultation or the Act more generally, please call us on 0113 207 0000.