For many employers, redundancy has become an unfortunate but familiar part of managing organisational change.
But while the principles of a fair redundancy process remain the same, the legal landscape around redundancy is evolving. The Employment Rights Act 2025 (ERA) has introduced significant reforms, with further changes over the coming months.
While not every detail has been finalised, the direction of travel is clear – redundancy exercises are likely to become more heavily scrutinised, more demanding and, if employers get them wrong, potentially much more expensive.
Hari Singh, Employment Lawyer, explains why…
Redundancy mistakes are becoming more expensive
Getting a redundancy process wrong has always carried financial and legal consequences. Employees may bring claims for unfair dismissal, discrimination or, where collective consultation obligations apply, seek protective awards.
From 06 April 2026, the maximum protective award for failure to collectively consult doubled from 90 to 180 days’ pay per affected employee. In addition, since January 2025, Employment Tribunals have been able to increase awards by up to 25% where an employer fails to comply with the statutory Code of Practice. Taken together, this means employers could face a potential liability of up to 225 days’ pay per affected employee.
For larger redundancy exercises, the financial consequences can escalate very quickly.
Collective consultation requirements are set to change
Our previous blogs have looked at the current rules around collective consultation and some of the most common pitfalls employers make. Those obligations remain unchanged for now.
However, the ERA includes proposals that could change how collective consultation thresholds operate in the future. Although the detail is still subject to the government’s response to the consultation feedback, they’re looking to introduce an organisation-wide threshold to trigger collective consultation obligations. This could be:
- a single fixed number in the range of 250 to 1,000; or
- tiering the new threshold based on number of employees.
Either way, it looks as though the current “at one establishment” requirement will be removed which could mean that more redundancy exercises will meet the threshold to collectively consult. For organisations that regularly restructure across multiple sites or business units, now might be a good time to review how your existing redundancy processes could work under these proposals.
More employees will have unfair dismissal protection
One of the most significant ERA reforms is the planned reduction in the qualifying period for unfair dismissal from two years to 6 months (likely from 01 January 2027).
This means that more employees will have the right to challenge the fairness of a dismissal much earlier in their employment than they do under the current rules.
That doesn’t mean every redundancy decision will be challenged, but it does mean employers should assume that every redundancy process needs to be capable of standing up to scrutiny, regardless of an employee’s length of service.
Good redundancy processes matter more than ever
Throughout this Redundancy Risk Series, we’ve explored the key stages that help employers reduce legal risk:
- Running meaningful consultation.
- Building fair and evidence-based selection criteria.
- Exploring suitable alternative employment before confirming dismissal.
Those principles haven’t changed. If anything, they’re becoming even more important.
As employment law evolves, employers who can demonstrate that redundancy decisions were carefully planned, fairly implemented and properly documented will be in the strongest position if their decisions are ever under scrutiny. Redundancy should never become a box-ticking exercise. It should be a process that employers can confidently explain and justify from start to finish.
What should employers be doing now?
You don’t need to wait for every detail of the reforms to come into force before reviewing your approach. Now is a great opportunity to:
- Review your redundancy policies and procedures.
- Train managers involved in consultation and selection.
- Ensure your selection criteria are objective and evidence-based.
- Review how suitable alternative employment opportunities are identified and offered.
- Consider whether your organisation would be ready if a large-scale redundancy exercise became necessary.
Employers who prepare early will be far better placed to adapt as the remaining reforms are implemented.
How can we help?
Whether you’re managing an individual redundancy process or a larger collective exercise, we help you build a fair, consistent and legally defensible approach, reducing redundancy risk throughout. We can support you with:
Individual redundancies – access to documentation, templates and unlimited employment law advice through our Intelligent Employment platform.
Collective redundancies – end-to-end legal support, including our Collective Consultation Toolkit and expert guidance throughout the process.
Outplacement support – through Working Transitions, part of the Empowering People Group, helping employees navigate redundancy and career transitions with confidence.
What’s next in the Redundancy Risk Series?
So far in our series, we’ve explored the biggest redundancy mistakes employers make, what meaningful consultation looks like, how to build a fair and defensible selection process, and why suitable alternative employment should never be overlooked.
Next time, we’ll bring the series together by looking at what good redundancy planning really looks like and the practical steps employers can take to reduce redundancy risk before any process even begins.
This update is accurate on the date it was published but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.
