The UK Government consults on new collective consultation obligations

The Government has published another consultation paper on the Employment Rights Act 2025 ('ERA 2025'). This time, they are seeking views on the threshold for triggering collective redundancy obligations.

Current legislation provides that the obligations to collectively consult and notify the Secretary of State of collective redundancies are triggered when an employer is proposing to dismiss as redundant 20 or more employees at one 'establishment' within a period of 90 days or less. 

ERA 2025 introduces a new 'organisation' test so that, as an alternative to the existing 'establishment' threshold above, the obligations will be triggered if an employer is proposing to dismiss as redundant at least a threshold number of employees across its 'organisation' within a period of 90 days or less. The rationale for this change is that there have been situations where large numbers of employees at an organisation are not consulted because redundancies are spread across multiple sites below the current threshold.  

The Government is seeking views on the level and methods by which the new organisation-wide threshold for triggering collective redundancy obligations might be set.  

The Government proposes to set a single fixed number within the range of 250 to 1,000 proposed redundancies. It believes that this is the clearest, easiest way to ensure that employers understand their obligations, and that employees and trade unions are certain when they are entitled to collective redundancy consultation. It also considers that this is the method least likely to lead to disputes. The consultation paper estimates the proportion of employers and employees who could be in scope at a fixed threshold of 250, 500, 750 or 1,000 redundancies and the estimated additional collective consultations per year. For example, setting the threshold at 250 would potentially mean 9000 employers are in scope and 97 additional collective consultations per year.

The Government has also considered other methods for setting the organisation-wide threshold.  Its alternative proposal is to apply different fixed numbers according to the number of employees - i.e: 

• For organisations with 0 to 2,499 employees: 250 redundancies;
• For those with 2,500 to 9,999 employees: 500 redundancies; and
• For those with 10,000 or more employees: 750 redundancies.

This alternative proposal would permit the largest employers to make many more redundancies without being required to undertake collective consultation, so the Government's view is that it may not provide adequate protection to employees. Further, it fears that the introduction of tiers would require employers to calculate their business size in order to know which threshold applies, making it more difficult for those who sit on the peripheries between tiers to calculate their size. If this approach is pursued, the Government proposes that employers calculate their employee numbers against a snapshot date annually, proposed as 5 April to align with the beginning of the financial year. 

The Government has stated that it does not consider that a percentage-based method would offer the right levels of protections, as (if fixed) it would be difficult to set the percentage at an equitable level and (if tiered) there could be unnecessary disputes about the organisation-wide triggering number. 

Whatever proposal is implemented, it is apparent that proposed redundancies will need to be monitored across the entire workforce (rather than on a site-by-site basis) and collective consultation obligations will bite in more cases involving larger employers in future. Owing to the increase to the maximum protective awards for non-compliance (from 90 days' uncapped pay to 180 days' uncapped pay), the cost to all employers of getting things wrong will also increase (see here). This is before one considers the potential additional cost of uncapped unfair dismissal (and other) claims. Therefore, it seems likely that, in future, employers might decide to comply with their collective consultation obligations rather than seek to 'buy them out' as they might have done previously – but time will tell.

The consultation closes at 11.59 pm on 21 May 2026. If you have any views that you would like the employment team to express on your behalf, please don't hesitate to get in touch. If you would prefer to respond directly you can do so using the link above.

This article was authored by Melissa Paz, special counsel in our UK employment team.