Employment Rights Bill bitesize: collective redundancy  

The Employment Rights Bill was published on 10 October 2024, setting out a wide range of ambitious workplace reforms. For an overview of the Bill, see our ‘headlines’ article. 

In this series of ‘bitesize’ articles, we look at different key provisions of the Bill in more detail, consider the implications for employers and explain what the next steps will be. 

Collective redundancy: what does the Bill say? 

The Government is committed to introducing significant changes to the rules governing collective redundancy (i.e. large-scale redundancies). Currently, the obligation to carry out collective consultation with trade union representatives or elected employee representatives is triggered only if 20 or more redundancies are proposed at a single establishment within a 90-day period (for example, at one site, shop or branch). The key change within the Bill is the removal of the ‘one establishment’ requirement for the obligation to be triggered. This means that employers will have to count redundancies across all parts of the business when determining if the threshold for collective consultation is met.  

What does this mean for employers? 

The mandatory collective consultation obligations will be much broader in scope if the Bill is passed in its current form. For multi-location employers, these changes will introduce new challenges and greater responsibilities. The requirement to count redundancies across all sites means that more redundancy exercises will trigger the need for collective consultation. This could lead to increased administrative burdens and lengthier timelines for finalising redundancies, resulting in a greater financial burden for employers. Employers will need to be more diligent in tracking and managing redundancy processes across multiple locations to ensure compliance.  

To deter employers against non-compliance and further strengthen employee protections, the Government is also considering increasing the maximum compensation cap (known as a protective award) for failing to collectively consult from the current cap of 90 days’ pay to a maximum of 180 days’ pay per affected employee, or potentially removing the cap entirely. The Government is also consulting on whether interim relief should be introduced for employees who bring claims for a protective award. This means an employee could make an application to the Employment Tribunal to continue to be paid in full, pending the final hearing of their claim.  

These proposed changes will significantly raise the stakes for non-compliance. Employers could face more substantial financial penalties if they fail to meet their consultation obligations. This will make it crucial for businesses to understand and adhere to the new requirements to avoid potentially costly legal repercussions.  

What are the next steps? 

The Government is currently consulting on these proposals. The consultation is due to close on 2 December 2024. The consultation responses and subsequent outcome of the consultation may inform changes to the proposals within the Bill. You can find more information about the consultation and how to respond here.  

You should also note that these are unlikely to be the only changes to collective consultation obligations. The Government intends to gather further responses on strengthening other aspects of the collective consultation process in early 2025. This includes increasing the minimum consultation period when an employer is proposing to dismiss 100 or more employees from 45 days to 90 days.