Retailer Matches Fashion went into administration in March 2024, but its troubles were far from over. Nearly 300 of its former employees have now each been awarded 90 days’ pay by an Employment Tribunal as a consequence of the company’s failure to carry out proper consultation before making them redundant.
Matches’ position would have been even worse had the Employment Rights Bill 2025 already come into force. The Bill introduces substantial reforms to the UK’s employment law landscape, including in relation to collective redundancy consultation and the regulation of fire and rehire practices. Employers should review their workforce planning and consultation procedures in light of these developments. In particular, any potential restructurings should be implemented sooner rather than later, before the changes take effect.
1. Collective redundancy consultation – expanded scope and increased risk
The Bill retains the existing duty to consult where 20 or more redundancies are proposed at one establishment within a 90-day period. However, it will introduce a new threshold (the details of which are still to be confirmed) requiring consultation where redundancies are proposed across multiple sites or the entire organisation. This change is designed to prevent fragmentation of redundancy exercises to avoid consultation obligations.
The government is still considering whether to increase the minimum period of consultation for large scale redundancies from 45 days to 90 days. From April 2026 the maximum protective award for failure to consult will increase from 90 to 180 days’ pay per employee. This significantly raises the financial exposure for non-compliance, so employers need to take prompt action in order to not be subject to these new provisions.
2. Application to non-redundancy dismissals
These rules around collective redundancy consultation – and the imminent changes to them – apply not only to redundancies but also to dismissals for reasons not related to the individual employee. This includes those arising from contractual changes. The Bill clarifies that dismissals linked to changes in terms and conditions, such as those seen in fire and rehire scenarios, may trigger collective consultation obligations if 20 or more employees are affected.
Employers should therefore be aware that contractual change dismissals may fall within the scope of collective consultation, even where redundancy is not the stated reason. This means that attempts to avoid redundancies by changing contractual terms of employment (such as reducing variable pay, changing hours of work, altering holiday entitlement) may well be caught by the changes. Dismissals for these reasons may also attract a further 25% uplift in compensation where the employer fails to follow the Code of Practice on Dismissal and Re-engagement.
3. Fire and rehire – new restrictions and automatic unfair dismissal risk
The Bill introduces automatic unfair dismissal protection for employees who are dismissed for refusing to accept changes to their core contractual terms, such as pay, hours of work or pension contribution levels. Employers may only justify such dismissals under a narrow financial hardship exception, requiring demonstrable evidence that the business’s immediate viability is at risk.
Additionally, the legislation extends protections to “fire and replace” practices, where employees are dismissed and substituted with agency staff or contractors. These changes reflect a broader policy shift toward negotiated change rather than imposed restructuring, and are due to take effect in October 2026.
Summary
This means that an employer considering restructuring its workforce will face significantly more restrictions on its ability to do so from next year. Not only will there be new (more onerous) rules around collective redundancy consultation, but attempts to avoid redundancies (by, say, changing terms and conditions of employment) may well be caught by the new fire and re-hire restrictions, if the employer is proposing both making changes to terms and conditions and giving effect to restructuring dismissals. The consequences of failing to comply with the new rules will be severe.
All of which shows there are many reasons why employers should be considering implementing their restructuring proposals over the next few months, as a priority.
Andy Williams