Collective Redundancy and the Employment Rights Act: What Changes for UK Employers

Collective redundancy rules have been largely unchanged for years. Most UK employers know the laws: if you’re planning to make 20 or more employees redundant within a 90-day period at the same establishment, you must collectively consult. That threshold — and the specific legal meaning of the term “establishment” — has shaped how employers plan headcount reductions for a long time. 

The Employment Rights Act 2025 has already started to change the picture. Not all at once and not with full detail yet, but the direction is clear. As of April 2026, the financial penalty for getting collective consultation wrong doubled. And from 2027, the government will have new powers to widen the circumstances in which collective consultation is required in the first place.

For employers running operations across multiple sites, this matters significantly. For any employer planning redundancies in the next 12 to 18 months, the time to understand these changes is now.

Let’s break it down.

Disclaimer: The information in this article is current as of May 2026 and has been prepared by Employment Hero UK Ltd and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.

Key collective redundancy dates

Date	What changes
Pre-April 2026	Collective consultation required where 20+ redundancies proposed “at one establishment” within 90 days. Protective award for non-compliance: up to 90 days’ pay per affected employee.
April 2026	Protective award for failing to comply with collective consultation doubles to 180 days’ pay per affected employee.
October 2026	Tribunal claim time limits extend from three months to six months, giving employees longer to bring claims.
2027 (date TBC)	Government powers to expand collective consultation obligations beyond the “one establishment” test come into force via secondary legislation. New threshold to be confirmed in future regulations.

What is collective redundancy? A quick recap

Collective redundancy rules have been part of UK employment law for decades, but they catch more employers out than you’d expect. Before getting into what’s changing, it’s worth being precise about how the current framework works.

Under existing UK law, if you propose to make 20 or more employees redundant “at one establishment” within a 90-day period, you must collectively consult with either a recognised trade union or elected employee representatives. This obligation applies regardless of the overall size of your business.

The minimum consultation periods are:

• 30 days where between 20 and 99 redundancies are proposed.
• 45 days where 100 or more redundancies are proposed.

This collective consultation obligation sits alongside the requirement to consult with each affected individual. Both apply. One does not replace the other.

What does “at one establishment” actually mean?

In practice, “one establishment” usually refers to a single, identifiable local unit of the business,  most often a particular office, factory, or site to which the affected employees are assigned. While the legal test is fact-sensitive, for most employers a “site” and an “establishment” will often align.

Here’s why that matters. If a business was proposing 19 redundancies at its London office and 19 redundancies at its Manchester office, the 20-employee threshold would not technically be met at either site. No obligation to collectively consult would arise, even though 38 people across the business were at risk.

This has given multi-site employers a degree of flexibility that single-site employers don’t have. The passing of the Employment Rights Act 2025 signals that this flexibility will  be reduced.

What happens if you get it wrong?

If collective consultation is required and you fail to carry it out, a tribunal can award a “protective award” to each affected employee. As of April 2026, that award can be up to 180 days’ pay per employee, doubled from the previous maximum of 90 days under changes introduced by the Employment Rights Act 2025. For even a modest redundancy exercise, the financial exposure is now significant.

When does the duty to collectively consult arise?

One of the most common and costly mistakes employers make is starting consultation too late. Many assume the obligation only kicks in once a decision to make redundancies has been finalised. That’s not how the law works.

The duty to collectively consult arises when an employer is “proposing” to make redundancies. In practice, this means once redundancies are genuinely being contemplated, before final decisions are made, before individual employees are told their roles are at risk, and well before any notice of dismissal is given.

If collective consultation has not begun at that point, you are already on the wrong side of the law regardless of how well you run the process afterwards.

The practical implication is that collective consultation needs to be built into the planning phase of any redundancy exercise, not treated as a step that follows the decision. Employers who start the process early are also better placed to demonstrate that they approached it in good faith, which matters if a claim is later brought.

What does collective consultation actually involve?

Knowing when collective consultation is required is one thing. Understanding what it actually involves is another.

Collective consultation must be carried out with either a recognised trade union or, where no recognised union exists, with properly elected employee representatives. Representatives must be given enough information and time to engage meaningfully with the process. Providing information at the last moment and then proceeding regardless is not genuine consultation.

The law requires that consultation covers at least three areas:

• Ways of avoiding the redundancies.
• Ways of reducing the number of employees affected.
• Ways of mitigating the consequences of the redundancies.

This is not a box-ticking exercise. The employer must genuinely consider any proposals put forward by representatives, even if they ultimately proceed with redundancies. A process that goes through the motions without real engagement is likely to be found non-compliant.

Consultation must also begin “in good time.” For proposed redundancies of 100 or more, that means at least 45 days before the first dismissal takes effect. For 20 to 99 redundancies, it means at least 30 days.

Employers must also provide representatives with a written notice containing specific information, including, but not limited to the reasons for the proposed redundancies, the number and descriptions of employees affected, the proposed selection method, the procedure and timetable, and the method for calculating redundancy pay beyond the statutory minimum.

The HR1 notification: A separate obligation most employers overlook

Collective consultation is not the only legal obligation that arises when 20 or more redundancies are proposed. Employers are also required to notify the Secretary of State in advance, using a form known as the HR1.

This is a standalone legal requirement, separate from the obligation to consult. It applies to the same threshold: 20 or more proposed redundancies at one establishment within a 90-day period. The notification must be submitted at least 30 days before the first dismissal takes effect (or 45 days where 100 or more redundancies are proposed), which in practice means it should be submitted at or before the point collective consultation begins.

The timeframes mirror the consultation periods:

• At least 30 days before the first dismissal where between 20 and 99 redundancies are proposed.
• At least 45 days before the first dismissal where 100 or more redundancies are proposed.

Failing to notify is a criminal offence. Both the employer and any officer of the company responsible for the failure can be prosecuted and fined. This is not a civil penalty or a tribunal award; it is a criminal sanction, and it applies regardless of how well the rest of the redundancy process is handled.

The HR1 form is filed with the Insolvency Service on behalf of the Secretary of State. The Redundancy Payments Service (RPS), which forms part of the Insolvency Service, administers redundancy-related payments from the National Insurance Fund. It asks for information including the reasons for the redundancies, the number of employees affected, the proposed start date of dismissals and whether a trade union or employee representatives are involved.

If the number of redundancies increases after the initial notification has been submitted, a further notification must be made.

Given the low awareness of this obligation among employers, it is worth flagging explicitly to any managers or HR teams involved in planning a redundancy exercise.

What the Employment Rights Act 2025 changes

It’s important to separate two distinct changes here, because they have different timelines and different levels of certainty.

1. The protective award has doubled (April 2026)

This change is already in force.

From April 2026, the maximum protective award for failing to comply with collective consultation obligations increased from 90 days’ pay to 180 days’ pay per affected employee.

That effectively doubles the maximum financial exposure for employers. For a business making 25 employees redundant with an average salary of £35,000, the potential liability for failing to comply with collective consultation requirements could increase from around £214,000 to more than £428,000.

In addition to these civil penalties, employers may also face criminal sanctions for failing to submit an HR1 form. This can result in a criminal conviction and an unlimited fine, with potential personal liability for any director, manager, or company secretary whose consent, connivance, or neglect contributed to the failure.

If your business is planning redundancies now or in the coming months, this higher penalty already applies.

2. A new organisation-wide trigger is being added (expected in 2027, with the threshold still to be confirmed)

This is the more significant structural change, although the detail is still being worked out.

The Employment Rights Act 2025 introduces a new trigger for collective consultation that looks at the total number of proposed redundancies across an employer’s entire organisation within a 90-day period, regardless of how those redundancies are spread across different sites or locations.

Importantly, the existing “one establishment” test of 20 or more redundancies at a single site is being retained. From 2027, both tests are expected to operate in parallel, meaning employers will need to collectively consult if either threshold is met.

The threshold for the new organisation-wide trigger will be set out in secondary legislation. The government launched a consultation on 26 February 2026, which closes on 21 May 2026, and has indicated that the threshold is likely to fall somewhere between 250 and 1,000 proposed redundancies. Current proposals suggest a single fixed threshold of either 250, 500, 750 or 1,000 redundancies across the organisation.

For most SMEs, the practical impact is likely to be limited. The new organisation-wide trigger is primarily aimed at large, multi-site employers carrying out substantial headcount reductions across their wider business operations. For small and medium-sized employers, the existing “one establishment” threshold of 20 or more redundancies at a single site will remain the key test to manage.

The new organisation-wide trigger is expected to come into force in 2027, once the regulations have been finalised.

What this means if you operate across multiple sites

The combination of higher penalties and potential changes to the threshold test creates a period of genuine uncertainty for multi-site employers.

Right now, the “one establishment” rule still applies. But planning redundancies on the assumption that it will stay exactly as it is may not be the safest approach, particularly if restructuring plans stretch into 2027.

A few scenarios worth thinking through:

• If you’re planning redundancies now or later in 2026: The higher penalty is already in force. The wider threshold changes are not yet confirmed, but the smart move is to collectively consult even where you might technically be below the threshold at individual sites, if the overall headcount reduction across the business is significant.
• If restructuring plans extend into 2027: You may be operating under a different set of rules by the time decisions are made. Build in the assumption that aggregate headcount reductions could trigger collective consultation regardless of individual site numbers.

How to prepare: Practical steps for employers

The law is changing, but solid preparation is straightforward. Here’s what employers should do now to reduce risk.

Step	Action
Review redundancy procedures	Audit your current redundancy processes to ensure they clearly set out when collective consultation is required, who is responsible for leading it, and what documentation must be retained. Update policies where these are unclear or missing.
Train your managers	Ensure managers understand when collective consultation may be triggered. With higher potential protective awards, failing to consult properly is significantly more costly than before. Emphasise escalation points to HR or legal.
Plan cautiously where multiple sites are involved	Where redundancies across the business may collectively reach 20 or more roles, even across different locations, take HR or legal advice before concluding that collective consultation is not required.
Document threshold assessments carefully	If you determine that collective consultation is not required, clearly record how you reached that conclusion, including the numbers considered and your reasoning. This will be essential if your decision is later challenged.
Get advice early	Seek HR or employment law advice before starting a redundancy process, particularly where numbers are borderline or operations span multiple sites. Early guidance is far less costly than defending a tribunal claim.

The bigger picture: Why enforcement is tightening

The doubling of the protective award doesn’t sit in isolation. It’s part of a wider set of changes in the Employment Rights Act 2025 aimed at strengthening enforcement of employment rights.

As of April 2026, the new Fair Work Agency was established with powers to proactively investigate non-compliance. Tribunal claim time limits will also extend from three months to six months in October 2027, giving employees more time to bring claims.

The combined effect is that employment law decisions made today may face scrutiny for longer and the financial consequences of getting them wrong are higher. Redundancy decisions, which are already high-risk and high-stakes, need to be handled with more care than ever.

Stay up to date with compliance with Employment Hero

If you’re trying to stay ahead of how the Employment Rights Act 2025 affects your business, Employment Hero’s HR Advisory team can help. Our HR Advisory service team works directly with employers to interpret new legislation, update policies and manage risk with confidence. Find out more about HR Advisory services here.