In brief
At present, employers are required to consult collectively if they propose to make 20 or more dismissals at one “establishment” in a 90 day period. The government has published a consultation seeking views on the level at which an additional organisation-wide threshold at which employers are obliged to collectively consult when dismissals are proposed should be set.
Key takeaways
- The government proposes that, as well as the current obligation to collectively consult with employee representatives when 20 or more redundancies are proposed at one establishment, there should be an alternative fixed threshold of between 250 and 1000 dismissals across the organisation within the same period. If either of these limits are reached, the employer will be required to consult.
- A Code of Practice on collective redundancy obligations will also be published and the new threshold, once confirmed, is expected to take effect in 2027.
- The consultation closes on 21 May 2026.
- For more information on what this development means for you, please get in touch with your usual Baker McKenzie contact.
In more detail
Sections 188 and 193 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) state that an employer must collectively consult employee representatives, and submit a form HR1 to the Secretary of State, where it proposes to dismiss as redundant 20 or more employees at one establishment within a 90 day period.
The Employment Rights Act 2025 will retain the establishment test, but also introduces an additional organisation-wide threshold at a level to be confirmed.
This consultation considers what the options for that organisational threshold should be, and offers two solutions:
- Using a single fixed number of between 250 and 1000 proposed redundancies, or
- Tiering the new obligation based on the number of employees an organisation has.
The consultation seeks views on the benefits of collective redundancy consultation, and how onerous it is for employers, as well as whether in practice, employers offer consultation above the legal minimum requirements. It asks about the extent to which employers make redundancies and whether or how they monitor the number of dismissals across their entire business. (Many commentators and employer organisations have already raised concerns that any obligation to keep an ongoing review of dismissals across a large organisation will create practical difficulties and that if the threshold is set too low, employers may be in inadvertent breach of their obligations).
The consultation notes that no other jurisdiction maintains both a single establishment and an organisation-wide threshold for collective redundancy obligations.
The consultation explains and seeks views on four options:
- A fixed number, applying to all employers. It would need to be set at a level which avoids large employers being constantly in collective consultation processes.
- A variable, percentage-based threshold applying to all employers. This would mean all employers were treated equitably, but would have increased administrative burdens and it may be harder for representatives and employee bodies such as unions to spot breaches.
- Different fixed thresholds, depending on the size of the employer. While this would be proportionate by employer, there may be complexities calculating the number of employees to ascertain which tier applies to a particular employer.
- A variable and fixed threshold, based on the size of the employer.
The government’s proposals
Having considered the options, the government’s preferred option is to set a single fixed number between 250 and 1000 proposed redundancies. This is the most certain and easiest way for all parties to understand the obligations.
If the number were to be fixed according to the size of the employer, it proposes that this would be:
- For organisations with 0 to 2,499 employees: 250 redundancies.
- For those with 2,500 to 9,999 employees: 500 redundancies.
- For those with 10,000 or more employees: 750 redundancies.
If this approach is preferred, then employers would calculate their employee numbers on a snapshot date of 5 April each year.
Code of practice
The government also states that it intends to launch a public consultation in 2026 on a proposed Code of Practice on collective redundancy obligations.