Government Consultation: New organisation‑wide threshold for collective redundancy obligations.
The UK government has launched a consultation on reforms to collective redundancy rules, following changes introduced by the Employment Rights Act 2025. The consultation, published on 26 February 2026 and closing on 21 May 2026, seeks views on how a new organisation‑wide trigger for collective consultation should operate.
What is the current law?
Under the current law, employers must carry out collective consultation when proposing 20 or more redundancies at a single establishment within 90 days. Where collective consultation is triggered, employers are obliged to consult with employee representatives and to notify the Secretary of State using the prescribed form HR1. Failure to notify the Secretary of State is a criminal offence punishable by an unlimited fine. A failure to collectively consult risks a claim for 90 days’ actual pay per affected employee.
Where redundancies are spread across multiple sites (with no site having a proposal of 20 or more redundancies), even if the total number of proposed redundancies is high, no collective consultation is triggered.
What changes are made by the ERA 2025?
The Employment Rights Act 2025 introduces an additional trigger that counts redundancies across the entire organisation, ensuring consultation takes place where significant job losses occur, even if no single site meets the existing 20‑employee threshold. This organisation-wide threshold is an additional test to the existing obligation to consult where 20 or more redundancies occur at one establishment. This change is currently due to come into force in 2027.
From 6 April 2026, the protective award that can be made if collective redundancy obligations are breached will double to 180 days’ uncapped pay per affected employee.
What does the consultation paper focus on?
The consultation asks for views on how the organisation‑wide threshold should be set. The government is evaluating several models, but its stated preferred option is to have a single trigger number for all employers. The proposal is for this to be in the range of 250 to 1,000 redundancies within 90 days. This is favoured because it is simple and gives legal certainty.
Other options being considered are a new test based on the percentage of the workforce, different thresholds according to total employee headcount and a hybrid model being a mixture of numbers and percentages.
What action points should employers consider?
Once the new thresholds have been confirmed, employers will need to consider their processes for managing, approving and recording redundancies, so that the new limits are not inadvertently breached. Given the increase in the protective award, mistakes in the future will be costly.
Employers could consider responding to the consultation before the deadline (21 May 2026) to ensure their organisation’s views are represented.
