Employers proposing 20+ 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, employees can claim a protective award (which is doubling to a maximum of 180 days’ pay per employee on 6 April 2026).

The Employment Rights Act adds a new threshold test, requiring collective consultation if there are:

• 20+ redundancies at one establishment, or
• another (new) threshold test is met, based on counting proposed redundancies across all sites and workplaces within a 90-day period.

The government is now calling for views on how the new organisation-wide threshold should be set, and at what level.

Why is this happening?

Under current rules, employers can make large numbers of employees redundant without any collective consultation obligation, if redundancies are dispersed across multiple sites with fewer than 20 affected at each location. 

The new organisation-wide threshold aims to close this gap. It will not replace the existing single-site trigger (20 redundancies at one site) but will sit alongside it. Either trigger will require collective consultation with employee representatives and notification to the Secretary of State on Form HR1.

The four methods under consultation

The consultation presents four methods for setting the organisation-wide threshold.

Method 1: fixed number (preferred approach)

A single fixed number would apply to all employers regardless of size.

This is the simplest option, but the government acknowledges that it needs to be set at a high enough level to avoid the largest employers being left in a constant state of collective consultation.

The government proposes setting this threshold somewhere between 250 and 1,000 redundancies.

Method 2: percentage

Under this method, collective consultation would be triggered when an employer proposes to make a certain percentage of its total workforce redundant.

This takes account of the employer’s size but would (theoretically) leave a gap in protection. The government points out that if, for example, the threshold was set at 10% then an employer with 50,000 employees could make 4,999 redundancies without triggering the new test (overlooking the obvious point that the single-site test would likely be triggered in this example).

This method would also require a headcount calculation. The government suggests this could be done by taking a snapshot on 5 April each year, including all employees in Great Britain (not Northern Ireland). However, there would inevitably be scope for disagreement on headcount.

Method 3: tiered fixed numbers (second preference)

This idea involves setting different fixed thresholds for employers of different sizes, e.g.:

• 250 redundancies for employers with up to 2,500 employees,
• 500 redundancies for employers with 2,500-9,999 employees, and
• 750 redundancies for those with 10,000 or more employees.

This also involves having to do a headcount calculation – but in practice this would only be needed for employers on the cusp of a particular tier.

Method 4: Combined variable and fixed

The final method the government is considering is the most complicated. It involves using both fixed numbers and a percentage threshold. Under this system, if an employer employs fewer than a certain number of employees, collective redundancy consultation would be triggered if it plans to make a set percentage of them redundant. Large employers, however, would be subject to collective consultation requirements if they proposed a certain number of redundancies organisation-wide.

Practical impact

• Simplicity is preferred. The government clearly favours methods 1 or 3, as they are the simplest. The percentage test in method 2 (likely to be preferred by the very largest employers) looks unlikely to be picked. If a pure percentage test comes off the table, the largest employers are likely to hope that it ends in tiers with methods 3 or 4.
• Not as low as feared. The proposed thresholds are not as low as some feared they would be, which is a welcome sign that the government is listening to the genuine concerns of large employers that any organisation-wide test could result in them being in a constant state of collective consultation.
• Helped by the courts. The recent Employment Appeal Tribunal decision in the Micro-Focus case gives more leeway to employers on counting collective redundancies. In the earlier Marclean case, the European Court of Justice had ruled that employers must look both forward and backward in counting the numbers of collective redundancies over 90 days.  The latest EAT decision in Micro-Focus, however, clarified that UK employers do not have to take into account past dismissals when deciding whether the threshold for collective redundancy consultation has been reached. These new proposals should be seen in the context of this decision. Assuming it’s not overturned on appeal, the Micro-Focus ruling means that past dismissals are discounted and the chances of tipping into the new threshold test are therefore reduced.
• In-progress exercises can be ignored. Additionally to the principle in Micro-Focus that past dismissals can be discounted, there is another exemption allowing employers to ignore any redundancies where consultation has already begun. So, for example, suppose you are making 100 redundancies at site A and 100 at site B, and you start collective consultation at both sites. A month later, you then propose 15 redundancies at each of sites C, D, E and F (60 more in total). Those additional 60 job losses are unconnected and were not on the cards when you proposed the Site A and B redundancies. In these circumstances, you still wouldn’t trigger a “250 organisation-wide” test. This is because you would ignore the site A and B exercises when counting the proposed redundancies, as consultation is underway.
• Largest employers making multiple small batches of dispersed redundancies could be caught. Even taking account of the above points, the end result could mean that collective consultation requirements will be triggered more often for the very largest employers making lots of small batches of redundancies across multiple sites.  We could see more larger employers setting up standing bodies, so they are “ready to go” as and when needed, to avoid the need for continual time-consuming elections of employee representatives and/or employees having to be “their own rep” in these sorts of circumstances. However, in a separate amendment made by the Employment Rights Act (not part of this consultation) the law is changing to clarify that employers will not be required to consult all the employee reps together or try to reach the same agreement with them all – which is helpful as it means that consultation does not necessarily need to be centralised.
• Employees in small sites will have a clear right to be included in company-wide large-scale collective consultation.  Suppose a retailer plans 300 redundancies across 10 stores. At one small store, only 10 redundancies are proposed. At all other stores, 20 or more redundancies are expected. On the current site-based test, the employees at the smaller store have no clear freestanding legal right to be included in the collective redundancy consultation (other than as employees affected by the proposals elsewhere). Under the new test, the organisation-wide trigger would likely be met (depending on exactly where it is set), meaning that employees at the small store would have a clear legal right to be included.
• Employers with multiple employer entities are advantaged. The law looks at redundancies within each employing entity separately. The new threshold test does not change this approach. This means that redundancies at site A and site B will only be counted together for the purposes of the new threshold test if the employing entity is the same. If employees at site A and B are employed by separate operating companies then they are not counted together.
• Larger multi-site employers will need to implement tracking systems. It is relatively easy to track numbers of actual redundancies but, at that point, it is too late. Once a final decision is reached on the new test, employers will need to devise a system for tracking proposals to ensure compliance. 

Next steps

If you have views on the appropriate threshold level or method, the consultation offers an opportunity to shape the final regulations. If you are a client or contact, please do get in touch with us and let us have your views.

The consultation closes on 21 May 2026 and the new threshold test is expected to come into force in 2027.