On 26 February 2026, the government published a consultation on the changes to the collective redundancy consultation threshold that are due to be introduced under the Employment Rights Act 2025 (ERA 2025).
Facts
Under the ERA 2025, the threshold for collective redundancy consultation will be amended so that:
- Where dismissals are proposed "at one establishment", the current threshold of 20 or more dismissals in a 90 day period will be retained
- A different, higher threshold will be set for collective consultation where employees are to be made redundant at more than one establishment (effectively, aggregating dismissals across establishments)
The introduction of the additional threshold is intended to address the perceived unfairness that can arise under the current law where employers make large numbers of dismissals across multiple establishments but are not required to conduct collective consultation. Perhaps the most famous example of this is when Woolworths collapsed, and the courts held that each individual Woolworths store was a separate establishment, so there was no requirement for collective consultation at the stores that employed fewer than 20 people.
Further details of the additional higher threshold will be set out in regulations. The government is now seeking views on the level and methods by which this threshold should be set. The consultation states that the government's proposals are informed by the following principles:
- The changes should strengthen redundancy rights and protections for employees
- Larger employers should not be left in a constant state of consultation
- Regulations should provide certainty and clarity, and reduce the scope for disputes or abuse
The government's preferred option is to set a single fixed organisation-wide threshold at any of 250, 500, 750, or 1,000 proposed redundancies. Under this option, collective consultation would be required if an employer was proposing, within a period of 90 days:
- To make 20 or more dismissals at one establishment, or
- To make at least the threshold number of dismissals across its organisation
The government's view is that using a simple fixed number is the easiest way to ensure employers understand their obligations. It is recognised that the threshold would need to be set at a sufficiently high level to avoid the largest employers being in a constant state of consultation, without excluding too many employees of smaller employers from protection.
The alternative option on which the government is also seeking views is a tiered approach, with different fixed thresholds depending on employer size:
- 250 redundancies for organisations with 0 - 2,499 employees
- 500 redundancies for organisations with 2,500 – 9,999 employees
- 750 redundancies for organisations with 10,000 or more employees
Under this approach, an employer's size would be calculated on an annual basis using 5 April as a snapshot date, and including all of the employer's employees in Great Britain. The tiered approach has the advantage that the threshold number could be more proportionate to the size of the employer. However, the government acknowledges that using tiers such as those described above may lead to a perception of unfairness for employers (and their employees) who sit at the margins.
The consultation notes that the government originally considered setting the threshold based on a specified percentage of employees (whether a single fixed percentage or a variable percentage depending on employer size) but discounted this option as too burdensome and complex.
What does this mean for employers?
The government's acknowledgement of the need for clarity and simplicity and its stated aim of avoiding a situation where large employers are in a constant state of consultation is encouraging. However, any change to consultation thresholds, which require multi-site employers to keep track of proposed dismissals across their various sites, will involve an administrative burden and create a potential risk of inadvertent breaches. This could be extremely costly for employers, particularly given the doubling of the maximum protective award from 90 to 180 days' pay in April 2026.
The consultation closes on 21 May 2026. The government will then consider responses and produce draft regulations. The substantive changes to the law are expected to take effect in 2027.
We will be conducting a survey of our clients so that we can reflect their views on the government's proposals in our response to this consultation - please do look out for your survey invitation in due course.
Make Work Pay: threshold for triggering collective redundancy obligations
