Employment Rights Act 2025: Collective redundancy consultation update

In this blog from Co-operative UK’s Advice Team, Employment and HR Paralegal Stephen Jones explains the recent hike in penalties under the Employment Rights Act 2025 – as well as upcoming changes to the redundancy consultation threshold.

The Employment Rights Act 2025 significantly increases risk in redundancy exercises. From 6 April 2026, the maximum protective award for failure to collectively consult increased from 90 to 180 days’ pay, per affected employee, materially increasing the cost of non-compliance. 

Another legal point for co-operative HR teams to consider is the government’s consultation, which closed on 21 May 2026, on the introduction of an additional, organisation-wide trigger for collective redundancy consultation. 

This is expected to take effect under the Act from 2027 and will sit alongside the current requirement to consult where 20 or more redundancies are proposed at a single establishment within 90 days. It means that multi-site employers must consider redundancies that are taking place across their entire organisation when assessing whether the threshold for collective consultation has been met. 

The consultation focuses on how this new threshold should be structured, such proposed models include: 

• Fixed figure: Current sources believe this to be the government’s model of choice, a universal threshold for all employers, suggested in the range of 250 to 1,000 redundancies. This model offers simplicity but must be set high enough to avoid large employers being in constant consultation. 
• Tiered fixed thresholds: Sources believe this to be the government’s second model of choice where the fixed figure approach fails. It focuses on different thresholds based on total employee numbers such as 250 redundancies for organisations with 0 to 2,499 employees. Where this model introduces proportionality, it may falter around threshold boundaries where organisations only just exceed or fall short of a tier boundary. To determine which tier applies, the government proposes calculating employee numbers on 5 April each year. 
• Percentage of employees: This workforce‑based threshold is set to reflect employer size. While proportionate in principle, it risks allowing large‑scale redundancies in bigger organisations to be completed without triggering collective redundancy obligations. 
• Combination model: As the model’s name suggests, the government is considering a hybrid of the percentage and fixed thresholds model. The benefit of this hybrid model is that it would be proportionate across employer sizes. However, it would be the most complex and potentially more exposed to dispute. 

The proposed thresholds are higher than anticipated, which suggests a policy intent to avoid over-triggering consultation obligations. However, the introduction of an organisation‑wide test will materially widen the scope of collective consultation for multi-site employers, who will need centralised oversight of redundancy planning. 

April 2026 has already increased the financial risk of getting consultation wrong, but the proposed 2027 reforms are likely to increase how often those obligations arise.

For more advice and guidance around your regulatory obligations as an employer, contact our Advice Team on [email protected].