Collective redundancy
As the law currently stands, employers proposing to dismiss as redundant 20 or more employees at one establishment, within a period of 90 days, are obliged to engage in collective consultation. If they do not do so, a Protective Award may be made of up to 90 days’ pay for eachaffected employee.
This obligation will be amended by the Employment Rights Act so that an employer must collectively consult with appropriate representatives (which will be the union where the union is recognised) where it proposes to dismiss as redundant within a period of 90 days:
-20 or more employees at one establishment: or
-At least the “threshold number of employees”.
It had originally been proposed to remove the requirement that the redundancies had to be “at one establishment” meaning the duty would be triggered if there were 20 or more redundancies across any entity as whole but this has been abandoned in response to intense lobbying from various business groups. This would have prevented a situation as happened in USDAW v WW Realisation 1 Limited & Ethel Austin (C/80-14), 30 April 2015, where the employer was not obliged to collectively consult about the dismissal of employees in many of the individual(Woolworths) shops which were being closed, because there were fewer than 20 employees employed within them, despite the fact that there was one proposal to dismiss all of the employees across the entire organisation.
Notwithstanding this, it is understood that the alternative threshold is likely to be based on the number of redundancies across the whole of the employer’s business. It will be set out in regulations which could be either a percentage of the workforce, or a specified number of employees across the business as a whole. This change is anticipated to take place in 2027.
The amount of the maximum protective award that can be made will be doubled from 90 to 180 days’ pay for each affected employee where an employer fails to collectively consult in line with its statutory obligations. The increase in the maximum award is designed to ensure that it is not commercially viable for an employer to ignore its obligations to enter into meaningful consultation with the appropriate representatives to consider alternatives to redundancies.
The new penalty is due to come into force in April 2026 and will be applied to existing legislative framework in the first instance.
Visit our main Employment Rights Act Hub for further information.