Reform to Collective Consultation: where are we now?

Collective consultation is a requirement for “larger-scale” redundancies and it is designed to provide workers with additional protection. This exists by creating a minimum period for consultation (between 30 to 45 days) before a dismissal can take place and it requires the employer to consult with employee representatives usually from a recognised trade union or appointed representatives. Failure by an employer to comply with its consultation obligations can lead to a protective award of up to 90 days’ gross pay per employee affected.

The obligation to collectively consult is currently only triggered if an employer proposes to make 20 or more employees redundant at one establishment within 90 days. Courts have interpreted the meaning of “one establishment” to mean the number of proposed redundancies as assessed at a single workplace rather than in the business as a whole.

Proposed reform

However, The Employment Rights Bill, as first presented to Parliament in October 2024, sought to reverse the status quo position where it proposed that an employer would have to collectively consult if the number of redundancies across a business as a whole, within the same 90-day period, was equal to or exceeded 20 employees.

There were a number of concerns raised about this proposed change, particularly by large, muti-site businesses that may be conducting small scale redundancies on a frequent basis across different sites. They were concerned that the change would require them to conduct redundancies in a coordinated fashion even where redundancies at different sites may have been unrelated.

A change of position

Perhaps in response to these concerns, the Government revised its position on this amendment and has, at least in part, reverted to the status quo position that redundancies should continue to be assessed at “one establishment” for the purposes of collective consultation.

However, the Government has also tabled amendments which would allow for collective consultation obligations to be triggered where an employer is proposing to make redundancies of at least the “threshold number of employees” across a business as a whole within a 90-day period.

The “threshold number” is not set out in the Employment Rights Bill and will instead be set out in separate regulations. There is no indication yet of what this number will be, but it could be a specified number or a percentage of the workforce or some other mode of calculation. However, the number cannot be lower than 20 employees.

This new amendment will mean collective consultation is more likely to be triggered across multi-site businesses than at present but perhaps not as frequently had the initial proposal of 20 or more business-wide been accepted.

How should employers prepare?

There will be less likelihood of large multi-site employers needing to collectively consult than initially anticipated because of the change in the Government’s position. However, employers should be mindful that under the Employment Rights Bill there will be a new trigger for collective consultation relating to redundancies across a business as a whole.

In order to comply with any obligations to collectively consult, an employer with multiple sites will need to ensure it is aware centrally of redundancies at any of its sites, so it can assess whether it is close to triggering the obligation to collectively consult and take appropriate steps. Timing of localised exercises will be critical as to whether the new threshold (as yet unknown) is met.

In anticipation, employers will be looking at their longer-term business planning, systems and models to ensure they are ready for the change this new threshold will bring once implemented, and whether any pre-emptive steps can be taken to prepare. Other business models may also be something larger business look at going forward; rather than operating multi-sites under one company name, separate smaller businesses could be created to limit the scope of redundancy exercises, but that in itself would require planning and most likely an element of consultation.

Importantly, the penalty for non-compliance with consultation obligations for an employer is also set to double from 90 days gross pay per employee to 180 days gross pay. This compensation award is one of the most severe in an employment context and it highlights the potential risk of an employer being unaware of or not properly exercising its obligations.