Collective redundancies under the Employment Rights Act 2025 (ERA): consultation launched on organisation-wide threshold

The Government has launched a consultation on proposed reforms to the collective redundancy regime which could significantly widen the circumstances in which collective consultation obligations are triggered.  

Current position

At present, employers must collectively consult with appropriate employee representatives where they propose to dismiss as redundant 20 or more employees at one establishment within a 90-day period and must notify the Secretary of State. 

Proposed change

Under the ERA, the current test will remain, but a new second trigger will also apply. Collective consultation (and Secretary of State notification) will be required where a threshold number of redundancies is proposed across the employer’s entire organisation within a 90-day period, regardless of how those redundancies are distributed across sites.

The Government’s concern is that employers are currently able to undertake large-scale redundancies across an organisation without triggering consultation and notification requirements because dismissals are split across multiple establishments.  

What is being consulted on?

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

Two broad approaches are under consideration:

• A single fixed threshold (in the range of 250 to 1,000 proposed redundancies); or
• A tiered threshold linked to the overall number of employees in the organisation.

The second of these approaches could take the form of: (1) a variable figure which is a percentage of the total number of employees; (2) fixed numerical thresholds which differ depending on employer size (for example, A# or more redundancies for employers with 0-X employees, B# or more redundancies for employers with X-Y employees, etc); or (3) a combination of fixed numbers and a percentage of total employees.

Subject to the outcome of the consultation, the Government has indicated that its preference is to adopt a single fixed-number threshold within the proposed range of 250 to 1,000 redundancies. It considers that this approach offers greater clarity and is easier for both employers and employees to understand, thereby reducing the risk of disputes and supporting more effective consultation.

The changes are expected to come into force in 2027, subject to Parliamentary approval.

Why this matters

If implemented, the reforms would materially increase the circumstances in which collective consultation obligations arise, particularly for multi-site and large employers. Redundancy exercises that are currently managed locally may in future trigger organisation-wide consultation and notification requirements.

Failure to comply with collective consultation obligations can result in protective awards, and failure to notify the Secretary of State is a criminal offence. With the maximum protective award due to double (from 90 days’ gross pay to 180 days’ gross pay) per affected employee in April 2026, the financial exposure for non-compliance will increase significantly. Protective awards are based on uncapped pay, meaning potential liabilities could be substantial.

One positive is that the proposed thresholds are not as low as some anticipated. This suggests the Government has taken on board the legitimate concerns of large employers, particularly the concern that a low organisation-wide number could leave them continually engaged in collective consultation. Another (small) positive is that employers will not be required to consult all appropriate representatives of employees together and will not be required to consult with a view to reaching the same agreement with all representatives (thereby providing a small degree of flexibility). 

Employers should begin factoring cumulative, cross-site redundancy numbers into workforce planning and restructuring strategy.  This may require introducing robust tracking systems, ensuring policies are fit for purpose and ensuring HR and managers are appropriately trained on organisation-wide consultation requirements.

The consultation closes on 21 May 2026. The Government has also indicated that it intends to publish a Code of Practice on collective redundancy obligations and will consult separately on this later this year.

Consultation responses will inform the regulations that ultimately set the organisation-wide threshold, so please let us know if you would like support in responding to the consultation or assessing the potential impact on your organisation.

For more information on ERA related reform and the impact on your workplace please speak to your usual CMS contact or visit our Employment Rights Act 2025 hub.