Collective redundancies – a shake-up under the Employment Rights Bill (“the Bill”)
- 07 November 2025
- Employment
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In today’s uncertain economic environment, it is rare to see a week go by without a major employer announcing redundancies, be that as a result a restructuring, a contracting business or a merger or acquisition. This is inevitably a worrying time for both employees who fear they may be at risk and employers, who must ensure a correct process is followed.
What is collective redundancy?
A collective redundancy is when, within a 90-day period, an employer proposes to dismiss 20 or more employees as redundant at one establishment. Generally, ‘establishment’ is taken to mean one site or workplace.
What is the current law?
Where an employer is proposing to make 20 or more redundancies at one establishment, within this 90-day period, the employer must:
- consult with the appropriate trade unions or (if there isn’t one) employee representatives; and
- notify the Secretary of State.
Consultation should start in good time and at least 30 days before the dismissal is proposed.
The employer must notify the Secretary of State at least:
- 30 days before the first dismissal, if there are anywhere between 20 to 99 redundancies; or
- 45 days before the first dismissal, if there are 100 or more redundances.
Failure to comply with the above could result in ‘protective awards’ against the employers of up to 90 days’ pay per employee. Moreover, failure to notify the Secretary of State is a criminal offence and can result in an unlimited fine.
What does the Bill say?
The Bill is set to provide a huge shake-up to the scope of employment law but, in terms of collective redundancies, important changes will be coming.
Winter 2025 and early 2026
The government may be consulting on whether the minimum consultation period of 45 days for 100 or more redundancies will be doubled to a minimum of 90 days.
April 2026
Protective awards for failing to comply with obligations will be increased from the currently used 90 days’ pay per employee to double that at 180 days’ pay per affected employee. In addition, if the employer has failed to reasonably comply with the Code of Practice on dismissal and re-engagement (i.e. employers failing to consult), employment tribunals can award a 25% uplift on the 180 days’ pay.
Redundancy is a potentially fair reason for dismissal and therefore may give an employer a defence to an unfair dismissal claim.
2027
Currently, the trigger for collective redundancies is when an employer proposes to dismiss 20 or more employees as redundant at one establishment. Additionally, from 2027, another trigger – which has yet to be defined in regulations – will be introduced. This will mean that in practice, employers must count all of the proposed redundancies across the whole of their business (i.e. all sites and workplaces), instead of just at the ‘one establishment’. If the threshold, which is yet to be defined by regulations, is reached, that employer will be bound by the obligations necessary for collective redundancies. As explained, the threshold is yet to be determined and will be set out in Regulations – but it could be a specified figure, or a percentage test could be introduced.
What should employers do?
Employers should be ready for when the above changes do come in, especially those employers who are set up in more than one location. Robust systems and processes will need to be in place. Multi-site employers will need to have oversight of and include all redundancy proposals across all of their establishments to ensure compliance with new Regulations.
Additionally, all the necessary staff should be aware of the incoming changes, with adequate training to understand their employer systems and processes. Repercussions will be higher, thus employers must ensure their senior staff in particular are equipped to engage with unions and / or employee representatives.
The new changes do however provide an opportunity for employers to enhance their internal employee voice and ensure that employee representatives are in place, should they be required for any collective consultations. For those employers with recognised unions, it is important to maintain healthy relationships with these unions. Building trust, confidence and communication will only help to serve employers and employees alike when navigating these more complex changes.
Legal Advice
If an employee believes that any of the required steps have not been followed or have any other concerns about the implementation of the redundancies, they should seek legal advice. It is a situation where mistakes can be made by employers keen to reduce their headcount in a hurry, leading to potential claims for unfair dismissal and, where there’s an improper motive behind the redundancy process, further claims like those for discrimination.
FAQs – Redundancy
A redundancy situation arises when an employee is dismissed in one of three circumstances:
- Where the employer ceases, or intends to cease, to carry out the business for the purposes of which the employee was employed (a business closure);
- Where the employer ceases, or intends to cease, to carry on that business in the place where the employee was employed (a workplace closure); or
- Where the requirement for employees to carry out work of a particular kind (or work of a particular kind in the place where they were employed) has ceased or diminished
Although a settlement agreement can be used as part of the redundancy process, it is not the same. A settlement agreement documents that an employee agrees to waive their rights to bring any legal action against their employer. Redundancy is different as it doesn’t waive an employee’s rights. In a redundancy situation, an employee may choose to sign a settlement agreement rather than take a redundancy package as they could get more money. However, by signing the agreement they would give up their right to make an unfair dismissal claim against their employer.
Yes, it is important to count the number of employees affected by a redundancy situation as there are collective consultation rules and obligations that will apply if the employer is proposing to dismiss 20 or more employees at one establishment within a period of 90 days or less.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.
