Collective Redundancy Reforms 2025: An In-House Lawyer Guide

1. Changes to the collective redundancy consultation threshold (expected in 2027):

Employers will still be required to collectively consult where they propose to make redundancies of 20 or more employees at one establishment within a period of 90 days or less.

However, a new, alternative, threshold trigger will be introduced. We are awaiting the definition of this alternative trigger, but it will involve counting proposed redundancies across the whole of the employing entity (rather than by establishment). This alternative threshold may be set as a fixed figure, a percentage of the workforce or another formula.

When this comes into effect, given the need to count redundancies across the whole employing entity, this will mean that collective consultation obligations will potentially be triggered more often and result in longer consultation processes. Businesses will need to have internal systems in place to monitor, co-ordinate and manage proposals across all sites in the relevant entity to ensure compliance.

2. Doubling of the maximum protective award (from April 2026):

The maximum compensation that can be claimed by each employee where an employer fails to comply with its collective redundancy consultation obligations (i.e. the protective award) will double from April 2026, so the consequences of non-compliance will become more expensive for businesses.

• At the moment, the protective award is up to 90 days’ gross pay* per employee.
• From April 2026, the maximum award will double, taking it to up to 180 days’ gross pay* per employee.

* the statutory cap on a week’s pay does not apply

3. Notification of ship crew redundancies 

At present, operators only need to notify the authority in the country where a ship is registered if redundancies affect crew on vessels registered outside Great Britain. Under the new rules, operators will also have to notify the UK Secretary of State if their ships regularly serve British ports. Failure to provide this notification could lead to an unlimited fine. This change is intended to strengthen protections for seafarers, following the mass dismissal of P&O Ferries employees without consultation in March 2022.

1.Carefully consider the timing of any future restructuring:

If businesses are already considering future restructuring, they should think now about whether they can complete that before the changes to the collective consultation threshold trigger.

2.Track developments on, and plan for, the ‘new threshold’ trigger:

With a new organisation‑wide threshold (to be determined) triggering collective consultation obligations coming, businesses should start thinking now about the systems they will need in place to monitor redundancies across all sites to identify when collective consultation obligations are triggered. Training HR and management teams on these changes will be essential.

3. Advise stakeholders of the increased financial exposure

The doubling of the maximum protective award means the cost of non‑compliance will be far greater. Model potential liabilities and advise business stakeholders of the increased financial risks of non-compliance.

4. Consider the impact of the unfair dismissal reforms

From 1 January 2027 employees with 6 months’ service will get unfair dismissal rights (rather than having to wait the current 2 years). This means that, in practice, employees who started employment from July 2026 or before will acquire unfair dismissal rights when this reform takes effect. Business should consider whether this will have any impact on their future proposals e.g. because it will mean more affected employees will have unfair dismissal protection than would otherwise have been the case, impacting their approach to consultation / payments.  The current cap on compensation for unfair dismissal claims will also be removed (although we are awaiting further consultation and details of when this change will come in).