Employment Rights Act 2025: threshold for triggering collective redundancy obligations

Currently, employers are required to consult appropriate representatives of the affected employees when they make 20 or more employees redundant at a single work establishment.

This has resulted in many situations where employees are not consulted because the redundancies are spread across multiple sites below the threshold. The Government is concerned that this can lead to unfairness among employees because the requirement to collectively consult and the remedy of a protective award for failure to collectively consult, will depend on how redundancies are distributed across establishments. It is keen to ensure that where there are large numbers of redundancies across an organisation, employers will be required to collectively consult. The Employment Rights Act 2025 provides for a new, additional trigger for collective consultation whenever a threshold number of employees or more are proposed to be made redundant across the organisation. The threshold will be set out in Regulations. The measures are expected to take effect in 2027.

Accordingly, where an employer proposes to dismiss as redundant within a period of 90 days or less either 20 or more employees at one establishment or at least the “threshold number of employees”, (not lower than 20) there must be collective consultation. The consultation paper seeks views on the threshold.

The consultation paper is in three parts:

• Threshold methods
• Threshold levels
• Government’s proposals

The consultation period ends on 21 May 2026.

Threshold methods

The Government has identified four methods to set the organisation-wide threshold and the consultation paper sets out helpful examples of each one:

• Fixed number which the consultation paper states is likely to be the clearest of all the methods. The Government would apply one fixed number to all employers, regardless of their size. Setting the number is challenging because if the number is low, it could mean that the largest employers are “in a constant state of consultation with employees”. If the number is high, this may mean smaller and mid-sized employers are exempt from the organisation-wide threshold.
• Variable (percentage-based threshold) which proposes setting the organisation-wide threshold as a percentage of the employer’s total number of employees. There are complexities in calculating the percentage however.
• Different fixed thresholds according to the size of employer. The benefit of this method is that the threshold numbers would be more proportionate to the employer’s size. The concern however is that “tiers may lead to cliff edges” and a perception of unfairness for employers at the margin of a specific tier.
• Variable and Fixed method where both fixed numbers and a percentage are used to tier the threshold. This method allows the Government to tier the obligations but to retain a cap. The complexities about using percentages still apply.

Whichever method is used, calculating the total number of employees is needed to determine either where a percentage figure is triggered or which tier applies to the employer. The consultation paper sets out several ways for calculating the number. For instance, calculating the average number of the total employees over a period of X months prior to a particular date or at the points when redundancies are proposed.

Note that the Act enables the Government to exclude certain kinds of employees from being taken into account for the calculation. For example, at particular times of the year, employee numbers may be inflated at an organisation because of the number of short-term contracts.

Threshold levels

As mentioned above, the current single establishment threshold trigger is retained along with the new, second trigger of the organisation-wide trigger. The Government estimates that up to 2.1 million employees could gain new protections depending on the threshold(s) set. The Government is seeking views on the appropriate levels to set the thresholds.

According to the consultation paper, 76% of organisations with fewer than 250 employees but more than 20 employees operate out of a single establishment. This means that they already have collective redundancy obligations whenever making 20 or more employees redundant. The Government considers that the lower end of any organisation-wide threshold should be 250 redundancies and that it would not be appropriate to set a threshold higher than 1,000 redundancies. As the consultation paper states, “both ends of this range would cover a strong majority of employees who could be in scope of this policy while exempting a strong majority of employers.”

Government’s proposals

• The Government’s Lead proposal is a single fixed number and subject to the consultation replies, it would set the organisation-wide threshold within the range of 250-1,000 proposed redundancies. It is of the view that this is the clearest method and least likely to lead to disputes between the parties.
• Another proposal is tiered fixed based on the number of employees. This would mean setting the level of the organisation-wide threshold by applying different fixed numbers, according to the size of employer. Employers would have to undertake collective redundancy obligations when proposing redundancies that meet the following thresholds:
  • 250 redundancies for organisations with 0-2,499 employees;
  • 500 redundancies for those with 2,500-9,999 employees; and
  • 750 redundancies for those with 10,000 or more employees.
• The third option of variable and tiered variable methods adds complexity according to the Government.

Finally, it is worth mentioning the protective award for failing to collectively consult. As mentioned in  our previous article about the Act’s implementation, Employment Rights Act 2025 Implementation for 2026 from 6 April 2026, the maximum period of the protective award is doubled from 90 to 180 days’ pay.

Useful links:

• Thresholds and collective redundancy consultation
• Blake Morgan’s Employment Rights Act 2025 Hub