The Employment Rights Bill: understanding the impact on collective redundancies

The Employment Rights Bill 2024-25 (the Bill) proposes significant reforms to collective redundancy procedures.

Background

Collective redundancy refers to a situation where an employer plans to dismiss a significant number of employees within a specific timeframe due to business-related reasons, such as closure, restructuring, or cost-cutting measures. The rules apply when an employer proposes to dismiss 20 or more employees within 90 days at a single establishment.

Employers must consult with employee representatives. If 20 – 99 employees are affected, consultation must begin at least 30 days before redundancies take effect and if 100 or more employees are affected, consultation must begin at least 45 days in advance. Before commencing the consultation, employers must also notify the Secretary of State of the potential redundancies by filing an HR1 form.

Key changes to collective redundancies under the Employment Rights Bill

Employers will be required to collectively consult where an employer is proposing to dismiss as redundant within a period of 90 days or less either:

• 20 or more employees at one establishment; or
• At least the ‘threshold number’ of employees across the whole business (the number to be specified in regulations).

Whilst this will increase the number of situations where collective consultation is mandatory, this will not mean that all redundancies across the business will count towards the threshold for collective consultation. Instead, there will be a business-wide threshold which is likely to be based on either a percentage of the workforce or a set number of redundancies.

The government has also confirmed that it is increasing the maximum protective award for failing to comply with collective consultation obligations. The award is currently capped at 90 days’ pay per affected employee and will be doubled to 180 days.

In response to feedback that employers would welcome greater support in order to ensure compliance with collective consultation obligations, the government has confirmed that it will issue further guidance for employers on consultation processes for collective redundancies in due course.

Summary of changes

	Current law	Proposed changes
Collective consultation required?	When proposing to dismiss 20 or more employees within 90 days at a single establishment.	When proposing to dismiss within a period of 90 days or less either: 20 or more employees at one establishment; orAt least the ‘threshold number’ of employees across the whole business.
Length of consultation: 20 – 99 affected employees	At least 30 days before redundancies take effect.	No change.
Length of consultation: 100+ affected employees	At least 45 days before redundancies take effect.	No change.
Maximum protective award	90 days’ pay per affected employee.	180 days’ pay per affected employee.

What this could mean for employers

• Companies with multiple sites will need to track redundancy numbers across all locations to determine whether collective consultation thresholds are met.

• Extended consultation periods and increased penalties could raise the financial impact of redundancy processes.

• Non-compliance could result in significant financial penalties and reputational damage.

Steps employers should take

Whilst the majority of the reforms contained in the Bill are not expected to take effect until 2026, employers can prepare for these changes now by:

• Engaging with employment law specialists to ensure redundancy procedures will align with the new legislation.

• Ensuring HR teams are prepared for extended consultation processes by keeping abreast of developments.

• Considering how redundancy decisions across different sites could cumulatively trigger collective consultation obligations and determining how such decisions will be tracked and monitored to ensure compliance.

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