When an employer proposes to make 20 or more employees redundant within a 90‑day period, the employment law imposes significant statutory obligations. Employers must undertake a formal collective consultation process in addition to issuing individual notices of dismissal. Failure to comply with these obligations can result in substantial financial liability.
Recent reforms introduce a material increase in the potential level of protective awards from April 2026, making compliance more critical than ever. Employers should ensure their redundancy processes are robust, compliant, and correctly implemented.
What Is a Protective Award?
A protective award is a financial penalty imposed by an Employment Tribunal where an employer fails to comply with its statutory collective consultation duties. It is not compensation for unfair dismissal, but a penalty for failing to follow the legally prescribed consultation procedure.
Collective consultation duties arise where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a 90‑day period.
Where the threshold is met, employers must:
- Notify the Secretary of State using Form HR1 before the first dismissal takes effect:
- At least 30 days in advance for 20–99 redundancies
- At least 45 days in advance for 100 or more redundancies
- Consult with appropriate employee representatives, either:
- A recognised trade union, or
- Elected employee representatives where no union is recognised
- Provide prescribed written information, including:
- The reasons for the proposed redundancies
- The number and descriptions of affected employees
- The proposed selection methods and dismissal process
- Undertake consultation with a genuine view to reaching agreement
Under the previous legislation, failure to comply may result in a protective award of up to 90 days’ gross pay per affected employee.
The Change Effective from 6 April 2026
Under reforms introduced by the Employment Rights Act 2025, the maximum protective award has increased.
From 6 April 2026, an Employment Tribunal may award up to 180 days’ gross pay per affected employee where an employer has failed to comply with its collective consultation obligations. This represents a significant increase from the previous maximum of 90 days under the Trade Union and Labour Relations (Consolidation) Act 1992.
Key points for employers:
- There is no statutory cap on weekly pay for protective awards
- Awards are calculated using actual gross pay, consistent with HMRC definitions of gross earnings
- The Tribunal retains discretion to award up to the statutory maximum, depending on the seriousness of the breach
For higher‑paid employees or large‑scale redundancies, the aggregate financial exposure can be considerable.
Why Employers Get This Wrong
Most collective consultation failures are not deliberate. They typically arise from misunderstandings of the statutory framework or from treating consultation as a procedural exercise rather than a meaningful process.
The 20-employee threshold
A frequent misconception is that the threshold applies across the entire organisation. In law, the test applies to each “establishment”, which is usually a specific workplace or operational unit. For employers operating across multiple sites, the analysis must be undertaken separately for each location. The definition of “establishment” can be complex and is often misunderstood.
Meaningful consultation
Consultation must begin before any final decision is made and must be undertaken with a genuine intention of reaching agreement. Informing representatives that redundancies have already been decided is insufficient and exposes employers to serious risk.
Timing of Consultation
Where the threshold is met, consultation must start in good time and at least:
- 30 days before the first dismissal (20–99 redundancies)
- 45 days before the first dismissal (100 or more redundancies)
This process must be completed before any notices of dismissal are issued. Employers operating under commercial pressure should initiate HR1 notifications and representative elections as early as possible.
What Employers Should Do Now
With the increased protective award regime in force from 6 April 2026, employers contemplating restructuring or headcount reduction should take a proactive approach.
Review Existing Redundancy Procedures
Audit current policies, templates, and timelines to ensure they fully reflect statutory collective consultation requirements. Processes that have not been reviewed recently should be updated.
Train HR Teams and Line Managers
Those responsible for managing redundancies must understand not only the procedural steps but also how Tribunals assess substance, intent, and engagement. A purely mechanical approach is unlikely to mitigate risk.
Maintain Comprehensive Records
Employers should retain clear contemporaneous records, including:
- Consultation meeting minutes
- Written communications with employee representatives
- Evidence of when prescribed information was provided
This documentation is often decisive in Tribunal proceedings.
Take Advice at an Early Stage
Errors made at the outset of a redundancy programme are difficult to rectify later. Early HR or legal advice can materially reduce exposure and ensure compliance from the start.
Consider the Wider Employment Law Landscape
The increase in protective awards forms part of a wider package of reforms under the Employment Rights Act 2025, affecting dismissal practices, trade union engagement, and worker protections more broadly. Employers who take a coordinated, compliance‑led approach will be better positioned to manage ongoing risk.
What Is Coming Beyond April 2026
The protective award reforms are part of a broader programme of employment law change taking effect during 2026 and beyond. These include measures affecting:
- Unfair dismissal qualifying periods
- Rights for workers on zero‑hours contracts
- Trade union access and engagement
- Protection against detriment related to industrial action
The direction of travel is clear: increased statutory obligations and increased financial exposure for employers who fail to comply.
Staying compliant requires more than periodic policy reviews. Employers should adopt a structured, ongoing approach supported by training, governance, and regular process review.
How The Infinity Group Can Help
At The Infinity Group, our services go beyond payroll to include keeping clients informed of key employment law developments, including reforms affecting redundancy and collective consultation.
We provide clear, practical insights into legislative change, including the implications of the Employment Rights Act 2025, helping employers understand how these developments impact operational and financial risk.
Our aim is to help businesses maintain compliance, implement processes correctly, and understand the practical impact of these changes on their operations.