Employers planning restructuring or redundancy programmes face a major new risk from April 2026: the maximum protective award for failing to collectively consult will double from 90 to 180 days’ uncapped pay per affected employee.
The change forms part of the Employment Rights Bill (ERB) and is expected to be one of the first measures to come into force. But commencement regulations will determine the exact trigger. That means the higher penalty could apply either to redundancy proposals made after April 2026 or to dismissals taking effect after that date. HR teams should treat all 2026 exercises as high-risk until the regulations clarify which date matters.
What stays the same for now
Collective consultation still kicks in when 20 or more redundancies are proposed at one establishment within 90 days.
Minimum consultation periods remain 30 days (20–99 redundancies) or 45 days (100+) before the first dismissal.
Employers must file Form HR1 with the Insolvency Service in good time; failure is a criminal offence exposing directors personally.
Tribunals continue to set protective awards at their discretion, guided by the seriousness of the breach. Currently the cap is 90 days’ pay.
New layers to prepare for
The ERB will add a second, company-wide trigger, catching smaller site-level reductions once numbers aggregate at entity level. The details — including the threshold number — will come in later regulations, and are expected to apply from 2027. Employers should prepare central oversight systems to track redundancy proposals across sites and employing entities.
Another significant reform will arrive from October 2026, when dismissal and re-engagement (“fire and rehire”) to impose certain “restricted variations” (pay, pensions, hours, shifts, holidays) becomes automatically unfair unless the employer can prove severe financial difficulty. Even then, meaningful consultation remains essential.
Practical steps now
Scenario-plan for April 2026: run two timelines — one where the new penalty applies to the proposal date, and one where it applies to the dismissal date. Budget on a worst-case basis.
Tighten governance: introduce a central tracker logging all redundancy proposals, proposal dates, consultation steps, and rep engagement.
Strengthen consultation practice: keep decisions genuinely open, avoid rushed “buy-out” tactics, and ensure fair rep elections where no union is present.
Educate directors: highlight that HR1 failures are criminal offences and that protective award exposure could reach half a year’s pay per head.
Monitor forthcoming regulations and guidance setting the company-wide threshold and clarifying the April 2026 commencement test.
Why it matters
Protective awards are already one of the most punitive liabilities in employment law. Doubling the cap to 180 days’ pay could turn a consultation misstep into a business-critical cost. With fire-and-rehire also becoming riskier from late 2026, HR leaders should be preparing compliance playbooks now rather than waiting for the regulations.
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