Head of Employment Dan Wilde takes a look at the changes to the collective redundancy payment award, which will come into effect on 6th April 2026.
What are the current rules around Collective Redundancy?
In England & Wales, a collective redundancy occurs when an employer proposes to make 20 or more employees redundant at one establishment (site or branch, not company) within a 90-day period.
By law, employers must hold a consultation in order to avoid redundancies, reduce numbers, and mitigate consequences. This consultation must start in “good time” and at least:
- 30 days before the first proposed dismissal or redundancy, if there are between 20 and 99 employees being made redundant; or
- 45 days before the first proposed dismissal or redundancy, if there are 100 or more employees being made redundant.
Failure to properly consult can lead to a “protective award” by an Employment Tribunal. As it stands, this potentially requires the employer to pay up to 90 days gross pay to each employee affected. However, this is changing.
What is changing?
As part of the Employment Rights Act 2025, the penalty for failing to properly consult will see the protective award double from 90 days’ pay per employee, to 180 days from 6th April 2026.
When combined with the potential uplift in compensation of up to 25% under the Dismissal and Re-engagement code of practice (which came into effect on 20 January 2025), this could see a protective award reach up to 225 days’ gross pay per employee.
This hike serves as a stern warning to employers that non-compliance will carry severe financial penalties.
How Can We Help?
Our specialist employment law team have extensive experience and can help you take a strategic approach to dealing with the people issues that arise from any major changes to your business, providing you with practical assistance to help you achieve your objectives, whilst at all times remaining compliant with the law.
If you need advice regarding the forthcoming changes to the Employment Rights Act, please get in touch. Likewise, if you need guidance through the difficulties of restructuring and redundancy, please email employment@hevans.com.
