The most recent stage in the implementation of the Employment Rights Act 2025, effective from 6 April 2026, has seen an increase to the maximum protective award that an Employment Tribunal can award for failing to meet collective consultation requirements in redundancy scenarios. For redundancies prior to 6 April 2026, the maximum award was 90 days' pay per employee. This has now doubled to a maximum of 180 days' pay per employee, with a potential uplift of up to 25% where an employer unreasonably fails to comply with a relevant Code of Practice (which will be published in due course).
This article explores why this increase to the maximum protective award has been implemented and the key considerations for employers. It also provides detail on further reforms that are on the horizon, which will impact when collective consultation can be triggered.
Collective consultation obligations currently exist at law in the context of larger scale redundancy processes, when 20 or more redundancies at one establishment are proposed within a 90-day period. If this threshold is met, an employer must formally inform and consult with employees, employee representatives or Trade Union representatives about the proposed redundancies and must allow employees to input into the process in order to try and reduce the number of redundancies proposed.
The Government has introduced this change to strengthen redundancy protection and encourage employers to comply with their obligations so as to avoid the increased penalties for a failure to do so. They have explicitly stated that their aim is to reinforce the importance of following correct procedures when it comes to redundancy, by effectively making failure to comply with those procedures more expensive for employers.
Employers need to be aware of the increased penalty for non-compliance with collective consultation procedures and ensure that these are being followed.
Employers should review and update their policies and procedures to ensure that they are clear on the requirements for collective consultation should the number and timeline of proposed redundancies trigger the relevant threshold. HR Teams and those involved in any redundancy process should be informed about the increased penalty that can now be awarded by the Employment Tribunal, as these costs could cause material financial damage should the maximum penalty be found to apply.
Currently, collective consultation is triggered when more than 20 redundancies are proposed at one ‘establishment’ (generally defined as a single site) within a 90-day period. The Employment Rights Act 2025 also adds a second trigger, that will effectively cover redundancies across an organisation as a whole, rather than at a single establishment. The government have yet to set out the regulations that will cover this reform so we do not yet know what this second trigger will look like in its entirety – the consultation period for this ended a few days ago – and it is likely to come into effect in 2027.
While the organisation-wide threshold is not yet in force, employers should take note where cross-organisation, multi-site redundancies may be on the horizon. Employers may want to seek to undertake these processes ahead of the implementation of changes which will trigger the collective consultation requirements so as to make the process simpler, easier to manage and lower risk.
For more information on how these changes may affect your business or if you have any queries, please contact our employment team.
