In this month’s instalment, our team summarises the latest UK case law and developments in employment law – and their implications for employers.
1. The Government has published the new annual statutory rates which apply to employment tribunal ("ET") awards and penalties that employers can face for breaches of UK employment law from 6 April 2025. The Presidents of the Employment Tribunals in England and Wales and in Scotland have also recently announced updated Vento bands for awards related to injury to feelings. Vento bands represent the different categories of awards that the ET can order upon finding that an employee has suffered injury to feelings in an employment dispute, usually relating to discrimination complaints.
- The newly proposed statutory rates are:
- A cap of £719 for statutory redundancy pay calculations (up from £700);
- A limit on compensatory awards for unfair dismissal of £118,223 (up from £115,115); and
- Statutory guarantee pay of £39 a day (up from £38).
- The newly announced Vento bands are:
- £1,200 - £12,100 (the lower band);
- £12,100 - £36,400 (the middle band);
- £36,000 - £60,700 (the upper band); and
- £60,700 + (for the most exceptionally serious cases).
2. Following last month’s update on the Government’s first round of amendments to the Employment Rights Bill (the “ER Bill”), further details have now been published regarding the proposed changes to the collective redundancy regime in the UK.
As previously mentioned, the amendments propose extending the period for protective awards from 90 to 180 days for collective redundancy situations. Once implemented, this means that the compensation employers will be required to pay employees for breaching collective redundancy consultation rules can now be as high as 180 days’ worth of the employee’s pay (uncapped).
The current regime:
In the UK, the duty for collective redundancy consultations arises when an employer plans to dismiss 20 or more employees at one establishment within a 90-day period. The duty requires informing and consulting with appropriate representatives of the affected employees, including trade unions if recognised, or elected employee representatives. Employers must also notify the Secretary of State (by submitting Form HR1) regarding the proposed redundancies, and failure to do so is a criminal offense.
Consultation must start in good time and within specified minimum periods: 30 days prior to the first dismissal where there are fewer than 100 proposed dismissals, and 45 days where there are more. The consultation must aim to reach agreements to avoid or reduce dismissals and mitigate their effects. Special circumstances can sometimes allow for reduced compliance, but these are narrowly defined.
If a claim for non-compliance is made, an employment tribunal ("ET") can issue a protective award. The maximum protective award an ET can grant is for 90 day’s gross pay for each employee dismissed in the redundancy. Sanctions for breaches are punitive in nature, as the ET will not consider the dismissed employees’ loss of earnings when deciding on the award but rather to the seriousness of the employer’s breach.
The proposed amendments:
The changes proposed by the ER Bill expand the scope of the regime whilst also giving it more teeth in terms of punitive awards. Specifically, the ER Bill proposes to:
- Broaden the situations in which companies will be required to collectively consult, so that they will need to do so when proposing to:
- dismiss 20 or more employees at one establishment within a 90 day period; OR
- dismiss a yet-to-be-determined number of employees across all of the employer’s establishments.
(The additional threshold is yet to be published but will be set out in the regulations that the Government is yet to provide a draft of).
- Introduce a new upper limit for protective awards that can be made by the ET, doubling the current penalty to 180 days’ gross pay for each employee dismissed in the redundancy.
The Government has also announced a further proposal, which was not included in the ER Bill but which they indicated they will be the subject of a further consultation. The proposal seeks to double the period prior to redundancies which employers must commence consultations (when proposing to dismiss 100 or more employees) from 45 days to 90 days.
Practical concerns for employers:
- Internal reporting/tracking systems: With the introduction of a new company-wide threshold for collective redundancies, employers with operations at multiple sites will likely need to enhance or implement internal reporting and tracking systems. Under the new regime even small-scale redundancy proposals across different sites could collectively trigger the need for consultation. Employers should proactively monitor redundancy proposals across all locations to avoid inadvertent non-compliance. Implementing a pre-emptive tracking system that monitors the number of proposed redundancies across all sites could help ensure compliance.
- Increased penalties for non-compliance: The proposed increase in the maximum protective award from 90 to 180 days' pay significantly raises the stakes for non-compliance with collective consultation obligations. This change aims to deter employers from ignoring their consultation duties, as failure to comply could become extremely costly. This is a consideration that employers will need to factor into their risk/reward analysis when deciding on their approach to collective consultation obligations.
- Potential for permanent employee representatives: In anticipation of more frequent collective consultations, some employers may want to consider establishing permanent bodies of employee representatives, as required under the regime. These standing bodies could streamline the consultation process by reducing the need for repeated elections and ensuring that representatives are adequately trained and experienced. However, employers must ensure these bodies are genuinely representative of the affected employees to avoid challenges to their authority.
- New considerations on employee transfers: Although slightly distinct from the above, employers should factor the additional obligations and penalties into the way they plan to structure any transfer of employees (or pre/post-transfer redundancies) during the acquisition of an existing business. The ER Bill also proposes that dismissing and rehiring employees to alter their employment contracts will be automatically considered unfair dismissal, except in very limited circumstances. This is an important consideration for companies when structuring employee transfers during an acquisition.
