Collective Redundancy: Getting It Right in a High-Risk Landscape

If the level of engagement we’ve seen on this topic recently is anything to go by, collective redundancy is front of mind for many businesses right now. That’s not surprising. Organisations continue to face economic pressure, restructure, and make difficult decisions, but the stakes have just become significantly higher.

Recent legislative updates have doubled the potential protective award from 90 days’ pay to 180 days’ pay per affected employee where employers fail to meet their consultation obligations. That is a substantial financial and reputational risk, and one that cannot be ignored.

For HR managers who may not have hands-on experience of collective redundancy, this is one area where getting it wrong is not a small procedural slip, it is a fundamental failure that can result in tribunal claims, financial penalties, and lasting damage to employee relations.

What is Collective Redundancy?

Collective redundancy arises when an employer proposes to dismiss 20 or more employees at one establishment within a period of 90 days or less. The key word here is “proposes.” The obligation does not wait until decisions are finalised, it is triggered at the point where redundancies are being contemplated as a real possibility.

This is where many employers fall into difficulty. By the time internal plans are fully formed, they may already be too late to comply properly with consultation obligations. The law is designed to ensure that employees have a meaningful opportunity to influence the outcome, not to be informed of a decision that has already been made.

When Does the Duty to Consult Arise?

The duty to consult begins when there is a proposal to make redundancies, not when a final decision has been reached.

This distinction is critical. If a business has already determined that redundancies will definitely happen, consultation is already too late. The process must begin while there is still scope to explore alternatives, reduce the number of dismissals, or mitigate the impact.

Tribunals will scrutinise this point closely. If consultation appears to be a formality rather than a genuine exercise, it is unlikely to be compliant.

Pre-Consultation Planning: Developing a Proposal, Not a Decision

One of the most challenging areas for HR managers is understanding what can and should happen before consultation begins.

There is nothing wrong with planning. In fact, it is essential. Employers should be clear on the business rationale, understand the financial drivers, model potential structures, and identify the roles that may be affected.

The key is mindset. You are developing a proposal, not a conclusion.

If consultation is presented with a fixed outcome, it undermines the entire process. However, if it is approached with openness.  Where alternatives can genuinely be considered, then the organisation is far more likely to meet both the legal and practical expectations of consultation.

Triggering the Obligation

The obligation is triggered when an employer is proposing 20 or more redundancies within a 90-day period at one establishment.

Employers sometimes attempt to stagger redundancies to remain below the threshold, but tribunals will look at the reality of the situation. If there is a single overarching proposal, dismissals may be aggregated.

Similarly, the definition of “establishment” is not always straightforward. It generally refers to the unit to which employees are assigned, rather than the entire business, but this is fact-specific and often contested.

Where there is any doubt, the safest approach is to assume the obligation applies.

Appropriate Representatives

Collective consultation must be carried out with appropriate employee representatives.

If a recognised trade union is in place, consultation must be with union representatives. Where there is no union, employers must facilitate the election of employee representatives unless there is an existing body with authority to act.

This is an area where errors frequently occur. Informal consultation with individuals or reliance on unmandated groups does not meet the legal requirement. The election process must be fair, transparent, and properly documented, and representatives must be given sufficient information and time to engage meaningfully.

The Content and Length of Consultation

Consultation must be meaningful and must include specific statutory information, such as the reasons for the proposals, the number and types of employees affected, the selection methods, and how the dismissals will be carried out.

However, this is not simply about providing information. The process must genuinely explore ways to avoid redundancies, reduce numbers, and mitigate the consequences.

There are minimum consultation periods of 30 days where 20–99 redundancies are proposed, and 45 days where 100 or more are proposed. These are minimums, not targets. Consultation must begin in good time and continue for as long as is necessary to ensure it is meaningful.

Collective Consultation vs Individual Consultation

A critical point that is often misunderstood is that collective consultation does not replace individual consultation.

Even where a collective process has been carried out correctly, each employee must still be consulted individually before any dismissal takes place. This includes discussing their individual circumstances, confirming their selection, and allowing them to challenge decisions.

Failing to carry out proper individual consultation can still result in unfair dismissal claims, even where the collective process itself was compliant.

Pools and Selection: Where Risk Often Sits

In practice, one of the most common areas of challenge is how redundancy pools are defined and how employees are selected.

Pooling decisions must be reasonable and defensible, particularly where roles overlap or duties are interchangeable. Selection criteria should be objective, measurable, and consistently applied. Criteria that rely heavily on subjective judgement can create risk if not supported by evidence.

For HR managers new to this process, it is important to recognise that these decisions are often scrutinised in detail at tribunal. A well-structured and documented approach can make all the difference.

Suitable Alternative Employment

Employers also have a duty to consider whether there is suitable alternative employment available within the organisation.

Where such roles exist, they should be offered to affected employees. Employees who unreasonably refuse a suitable alternative role may lose their entitlement to redundancy pay, but this depends on the role genuinely being suitable in terms of status, location, and terms.

The statutory four-week trial period is an important safeguard, allowing both parties to assess whether the role is appropriate. This is often overlooked but can be critical in avoiding disputes.

Are There Any Exceptions?

There is a limited statutory defence where “special circumstances” make it not reasonably practicable to comply with consultation requirements. This is a legal concept and is interpreted very narrowly by tribunals. 

It applies only in genuinely exceptional situations. Financial difficulty alone is unlikely to be sufficient, even where the business is under significant pressure.  In layman terms it must be something that is out of the ordinary, unexpected and outside of the employer’s control.

This is the key point. Even where special circumstances exist, employers are not exempt from their obligations entirely. They must still do everything that is reasonably practicable in the circumstances.

In reality, successfully relying on this defence is rare, and employers should proceed with extreme caution before assuming it applies.

The Cost of Getting It Wrong

The recent increase in protective awards from 90 to 180 days’ pay significantly raises the financial exposure for employers.

This award is punitive rather than compensatory and is often granted at or near the maximum where employers have failed to consult properly. When applied across a large number of employees, the financial impact can be severe.

In addition, employers may face unfair dismissal claims, reputational damage, and long-term impact on employee trust and engagement.

Notifying the Authorities

Employers must notify the Secretary of State using form HR1 before consultation begins.

The notification must be submitted at least 30 days before the first dismissal where 20–99 redundancies are proposed, and 45 days where 100 or more are proposed.

Failure to comply is a criminal offence and can result in an unlimited fine. This is an area that is frequently overlooked but carries significant risk.

The Role of ACAS Guidance

The ACAS provides comprehensive guidance on managing redundancy and consultation processes. While not legally binding, it is highly influential, and tribunals will consider it when assessing whether an employer has acted reasonably.

For HR managers navigating this process for the first time, ACAS guidance is an important starting point, offering practical support on both legal compliance and communication.

The Human Impact: Communication Matters

It is important not to lose sight of the human aspect of collective redundancy.

For employees, this is often a period of significant uncertainty and anxiety. How the organisation communicates, how leaders engage, and how individuals are treated throughout the process will shape how the business is perceived long after the process has ended.

Handled well, organisations can maintain trust and professionalism even in difficult circumstances. Handled poorly, the damage to culture and morale can be long-lasting.

A Note on TUPE and Complexity

In some cases, collective redundancy may overlap with TUPE situations, particularly where redundancies are connected to a transfer.

This can create additional layers of complexity, as both TUPE and collective consultation obligations may apply. Where this arises, careful handling and specialist advice are essential.

Final Thoughts

Collective redundancy is one of the most complex and high-risk processes an employer can undertake. It requires careful planning, early engagement, and a genuine commitment to consultation.

With the increase in protective awards to 180 days’ pay, the margin for error has narrowed significantly. This is not an area where employers can afford to take a reactive or informal approach.

For HR managers, particularly those without prior experience, the message is clear: start early, approach consultation with an open mind, and ensure both collective and individual processes are handled with care and consistency.

And if there is any uncertainty, whether around numbers, structure, or timing, just pause and seek advice. Once the process has started incorrectly, it is very difficult to recover.

Getting it right protects not only your organisation financially, but also your credibility, your culture, and your people.