The UK government’s Employment Rights Bill is advancing through the parliamentary process quickly and is expected to become law in the next few weeks. One of the key changes to be implemented is an increase to the maximum financial penalty which can be imposed if an employer fails to comply with collective redundancy consultation rules. The maximum penalty will increase from 90 days’ pay to 180 days’ pay for the affected employees.
The UK government intends that this change will take effect from April 2026. What is not yet clear is whether the new increased penalty will bite on redundancies which are implemented from April 2026 (which would mean that an employer which is currently formulating redundancy proposals which will take effect from April 2026 would be exposed the risk of this higher penalty) or whether it will only apply to redundancy proposals formulated by an employer from April 2026 onwards.
For now, the safe approach is to assume that redundancy proposals formulated before April 2026 which could result in redundancy dismissals from April 2026 onwards will be covered by this new regime and employers should take extra care to ensure collective consultation obligations are met to avoid risks of being exposed to these increased financial penalties.
Other changes relating to the thresholds for triggering collective consultation are not expected to be implemented until 2027. For further information on the implementation timetable please see our blog (Implementation of the Employment Rights Bill | Global Workplace Insider).