Beyond the Employment Rights Act – a new organisation-wide trigger for collective redundancy obligations?

The UK government has launched a consultation seeking views on a new organisation-wide threshold for triggering collective redundancy obligations. The Employment Rights Act 2025 (the ERA) is set to introduce significant reforms across UK employment law, and this consultation addresses a key aspect of strengthening collective redundancy protections for employees. 

What is being proposed?

Currently, collective redundancy obligations – which include consultation with affected employees’ representatives and notification to the Secretary of State – are triggered when an employer proposes to dismiss 20 or more employees at a single establishment within a 90-day period. However, according to the government, this framework has allowed some employers to undertake large-scale redundancies across an organisation without triggering consultation and notification requirements. 

The ERA will amend the current framework by introducing an additional organisation-wide threshold. This means that consultation and notification will be required when a specified minimum number of employees or more are proposed to be made redundant across an entire organisation, regardless of how those redundancies are distributed among individual establishments. 

The consultation specifically seeks views on the following. 

• Methods for setting the threshold – four methods are being considered: (1) a single fixed number; (2) a percentage of the total workforce; (3) tiered fixed numbers based on employer size; and (4) a combination of percentage and fixed numbers. The consultation considers how an employer should calculate the number of employees they have and whether certain kinds of employees (such as short-term employees only required at particular times of the year) should be excluded from that calculation.
• Levels for setting the threshold – the government proposes that the organisation-wide threshold should be set within a range of 250 to 1000 redundancies. The ERA specifies that the threshold cannot be set lower than 20 redundancies. 

The government’s preferred approach is to use a single fixed number to set the organisation-wide threshold within the range of 250 to 1000 proposed redundancies. This method is favoured for its clarity and ease of understanding for employers and employees, reducing the likelihood of disputes and ensuring effective consultation. This approach also aims to avoid placing disproportionate regulatory burdens on small and medium-sized businesses while still providing enhanced protections for employees. 

What does this mean for employers? 

The outcome of this consultation will significantly influence how employers manage redundancies in the future. Below we have set out some key takeaways. 

• Increased burden on employers – from 2027, employers will need to monitor and aggregate proposed redundancies across their entire organisation, not just at individual establishments, to determine if collective redundancy obligations are triggered. Robust systems and processes will be required to accurately track and aggregate redundancy numbers across the business, including monitoring how those numbers change over time as a result of any ongoing consultation.
• Greater financial risk – the doubling of the maximum protective award, which will take place in April 2026, means that the financial penalties for failing to comply with collective redundancy requirements will be substantially higher for employers. Remember that protective awards are calculated based on an affected employee’s uncapped salary, so there is increased scope for a significant financial penalty on an employer for non-compliance. This may strengthen employee bargaining power during the redundancy process and will make timely and thorough consultation even more critical.
• Proactive planning and review – employers should proactively review their redundancy policies and procedures and related documentation to align with these changes. Training for HR teams and managers will be essential to navigate the complexities of organisation-wide consultations and understand the heightened risks of non-compliance.
• Some flexibility in consultation processes – note that where an employer has made a number of redundancies which triggers both the current ‘one establishment’ and the new ‘organisation-wide’ thresholds, the employer will not be required to consult all of the appropriate representatives together and is not required to consult with a view to reaching the same agreement with all representatives. The ERA makes explicit provision for this, meaning that employers will have flexibility to hold a single consultation exercise with representatives of all affected employees or have separate consultation discussions across different groups. Despite this increased flexibility, it remains important that employers ensure that each group is consulted meaningfully.
• Strategic considerations – the new threshold may influence strategic planning around workforce changes. Decisions regarding the timing and distribution of redundancies will need to be carefully evaluated to manage compliance risks. 

The consultation closes on 21 May 2026 and a government response will follow. Consultation responses will inform the regulations which ultimately set the organisation-wide threshold. The government also intends to produce a Code of Practice on collective redundancy obligations and will launch a consultation on this later in 2026. The new provisions of the ERA are expected to come into force in 2027. Employers should remain informed and proactively prepare to navigate this evolving landscape.

For more information on the ERA and its implications for employers, please see here.