Redundancy is never easy – for employers or employees. However, when it does become necessary, for whatever reason, handling the process lawfully and sensitively is crucial. With the introduction of the Employment Rights Bill 2025, the stakes are even higher.
What is a redundancy consultation?
This is a legal requirement where employers must engage with affected employees before making any final decisions about redundancies. The aim is to explore ways to avoid or reduce redundancies and mitigate their effect.
There are two types of consultations:
- Individual consultation: Required for any redundancy, no matter how many employees affected.
- Collective consultation: Required when 20 or more employees are at risk of redundancy within a 90-day period at one establishment.
Action Points
1. Plan early and document everything
As soon as redundancies are being considered, you need to start planning. Keep detailed records of:
- The business rationale
- Selection criteria
- Alternatives explored (e.g. redeployment, reduced hours)
If an employment tribunal claim arises out of the redundancy process, you will need to be able to prove that you’ve followed all the steps required of you by law.
2. Identify the right type of consultation
- If fewer than 20 employees are affected: individual consultation is sufficient.
- If 20 or more employees are affected: collective consultation rules apply.
3. Notify the Government
For collective redundancies, you’ll need to notify the Redundancy Payments Service (RPS) using form HR1:
- At least 30 days before the first dismissal (for 20 to 99 redundancies)
- At least 45 days before the first dismissal (for 100+ redundancies)
The government says “If you do not comply with the statutory notification requirements without good cause, [this] may result in prosecution and a fine, on summary conviction, for the company and/or officer of the company.”
4. Engage employee representatives
When carrying out collective consultations, you must consult with:
- recognised trade unions, or
- elected employee representatives (if no union is recognised)
It may be necessary to allow time for those elections to be carried out.
5. Provide key information in writing
You must give those representatives written details of:
- The reasons for redundancies
- The number and roles of affected employees
- The selection criteria
- The consultation timeline
- Severance terms
6. Consult meaningfully
Consultation must be genuine and conducted “with a view to reaching agreement”. This includes:
- Exploring alternatives to redundancy
- Considering feedback on selection criteria
- Discussing ways to mitigate the effect
Again, keeping written records of all stages of the consultation process will enable to you to prove you’ve complied with this requirement.
7. Support affected employees
If there is a suitable alternative vacancy, the employer must offer it to the employee who is being made redundant. If they don’t, the employee could make a claim for unfair dismissal.
However, if a suitable alternative was available and an employer didn’t offer it, then this could have serious implications for the employer.
Outplacement support and counselling / wellbeing services, although not legally required, could be beneficial and employers should certainly consider these.
What’s new in 2025? Key changes from the Employment Rights Bill
The Employment Rights Bill 2025 introduces significant reforms to the redundancy consultation process:
Increased Protective Awards
Previously, if an employer failed to consult properly, a tribunal could award up to 90 days’ uncapped pay per employee. Under the Bill, this will double to 180 days’ pay.
Combined with the 25% uplift under the new Code of Practice on Dismissal and Re-engagement (in force since January 2025), the total liability could reach 225 days’ pay per employee.
Employers should therefore be left in no doubt that non-compliance will be very costly.
No Interim Relief
Although it was considered for inclusion, the Bill does not introduce interim relief (i.e. reinstatement or continued pay pending a tribunal decision) for redundancy cases
New guidance expected soon
The government has promised updated guidance for employers of all sizes to help navigate the new rules. However, tribunals still have broad discretion, and there’s uncertainty about whether the default award will now start at 180 days.
