The maximum penalty for not properly consulting about collective redundancies will double from 90 to 180 days’ pay per employee from 6 April 2026. Exactly how the new rules will apply to ongoing collective redundancy exercises is, however, unclear.

Last December, the Employment Rights Act 2025 become law. Most of the significant legal reforms contained in it will be phased in over a long period of time. Many of them will also be accompanied by transitional provisions to cater for the fact that changes might come into force during an ongoing process (such as an ongoing flexible working request or a trade union’s recognition application) or in other circumstances where ambiguity would otherwise exist over whether the old or the new rules apply (for example, do new family rights apply for babies due after a certain date, or born after a certain date, and does it matter if they are born early?). That is why transitional arrangements matter. They are supposed to provide clarity for these situations on the cusp.

Among the sweeping reforms contained in the Act are changes to the rules around collective redundancy consultation.

Under the current law, employers proposing 20 or more redundancies at one establishment within a period of 90 days must go through a process of collective consultation before making any redundancies. If employers don’t comply, they are liable to pay a protective award of up to 90 days’ pay per employee. Unlike in other areas of employment law, there is no cap on the daily amount of pay.

One of the changes made by the Act relates to the maximum protective award. It will double from 90 days’ pay to 180 days’ pay. This means that failing to meet the detailed collective consultation requirements will very soon attract a much higher penalty. Taking shortcuts or attempting to “buy out” collective consultation requirements will become significantly riskier and more expensive.

Under newly published regulations, the doubling of maximum protective awards will take place on 6 April 2026. As a transitional provision, the regulations provide that the new law “does not apply in relation to dismissals taking effect before 6th April 2026”.

It clearly follows that, if an employee’s dismissal takes effect before 6 April 2026, meaning that their employment contract actually ends before that date as opposed to notice merely being given to them before that date, the maximum protective award to which they would be entitled would be 90 days’ pay.

Equally, it clearly follows that, if all employees’ dismissals take effect on or after 6 April 2026, the maximum protective award to which they would be entitled would be 180 days’ pay.

Unfortunately, the position is far from clear on the face of the regulations in respect of an employee whose dismissal will take effect on or after 6 April 2026, when collective consultation was required because dismissals were taking effect both before, and on or after that date. This reflects that:

  • the Act amends the definition of the protected period in section 189(4) of the Trade Union and Labour Relations (Consolidation) Act 1992; and
  • insofar as is relevant, that definition is that the protected period “begins with the date on which the first of the dismissals to which the complaint relates takes effect”.

It follows that the transitional provision applies to “dismissals” but without specifying whether those are:

  • the “dismissals” referenced in section 189(4), which would mean that, so long as at least one dismissal has taken effect before 6 April 2026, no employee to which any complaint relates would be entitled to the increased protective award of up to 180 days’ pay; or
  • “dismissals” of employees in a general sense, which would mean that, so long as an individual’s dismissal took effect on or after 6 April, they would be entitled to the increased protective award of up to 180 days’ pay.

It is frustrating that, whilst the regulations provide clarity in respect of dismissals taking effect before 6 April 2026, no such clarity is provided in respect of dismissals taking place on or after that date as part of a redundancy exercise that also involved dismissals before it. It is therefore now a possibility that some employees affected by the same defect in a consultation process may receive double the protective award that their colleagues receive following a successful Tribunal case, simply because their dismissal took place as little as one day later than their colleagues’ dismissals.

On balance, we think that the better legal view is that the increased award applies only when the first of the dismissals takes effect on or after 6 April 2026. This is because:

  • following a successful complaint, a Tribunal must make “a protective award” in the singular;
  • a protective award must be for “the protected period”, again in the singular;
  • whilst the Interpretation Act 1978 provides that words in the singular include the plural, and words in the plural include the singular, that is only unless the contrary intention appears; 
  • in this context as the law is clear that “every employee” is entitled to be paid remuneration for “the protected period”, which points against different classes of employees receiving awards in respect of different periods; and
  • the transitional provision refers to “dismissals” rather than “any dismissal” reflecting the fact that this particular law is aimed at batches of collective dismissals rather than individual dismissals and supporting a collective interpretation, where the whole batch must fall one side of the line or the other.

Of course, this issue may be of little relevance for those employers who are currently complying in full with their collective redundancy consultation requirements. Nonetheless, the mere potential for some employees to be entitled to double the protective award on the basis that their termination date has been delayed when colleagues will have already left by 6 April 2026 is something that employers should bear in mind if they are currently engaged in a difficult consultation process.

It is frustrating that the transitional provision has not provided certainty. The Act will also, eventually, make changes to the threshold for collective redundancy consultation. As we recently wrote about here, that concept still needs to be set out in further regulations and is not expected to come into force until 2027. We hope that the transitional provision in respect of its introduction will be clearer.

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