Managing redundancy in the second half of 2026. What employers need to know before the rules change again.

Redundancy law in the UK is in the middle of a period of significant change. The April 2026 increase in the protective award, the rise in the unfair dismissal compensatory award cap, and the upcoming changes to collective redundancy rules in 2027 all create a landscape where the financial and legal risk of getting a redundancy exercise wrong has never been higher.

This guide covers what employers planning or considering redundancies in the second half of 2026 need to know.

The current position after April 2026

From April 2026, the maximum protective award for failure to comply with collective redundancy consultation obligations increased from 90 to 180 days’ gross pay per affected employee. In large-scale redundancy exercises, this can create significant financial exposure, particularly where consultation requirements have been overlooked or inadequately followed.

The unfair dismissal compensatory award cap has also increased to £123,543. In addition, the statutory cap on a week’s pay has risen to £751, increasing the maximum statutory redundancy payment to £22,530. Together, these increases reinforce the importance of ensuring that redundancy processes are planned and implemented correctly from the outset.

What is changing in 2027

From 2027, the rules on collective redundancy consultation are set to change significantly. Currently, employers are only required to collectively consult where 20 or more redundancies are proposed at a single establishment within a 90-day period. Under the new regime, redundancies will be counted across the business as a whole rather than at individual sites.

For businesses operating from multiple locations, this is a significant development. An employer with ten sites proposing three redundancies at each location,  30 redundancies in total  would not currently trigger collective consultation obligations because no single site reaches the threshold of 20 proposed redundancies. Under the new rules, those redundancies would be aggregated across the organisation, triggering the duty to collectively consult.

Employers planning restructures, cost-saving exercises or workforce reductions across multiple sites will therefore need to consider collective consultation obligations much earlier in the process than they do at present.

The January 2027 qualifying period change and redundancy

From January 2027, employees will acquire unfair dismissal rights after just six months’ service. As a result, employees recruited from July 2026 onwards may be able to challenge the fairness of a redundancy dismissal long before they would have qualified to do so under the current two-year regime.

This means that employers will need to pay even closer attention to the redundancy process. Selection pools, consultation procedures and selection criteria must all be capable of withstanding scrutiny. Objective selection criteria, applied consistently and supported by clear evidence, will be more important than ever.

How to run a lawful redundancy process in the second half of 2026

• Determine at an early stage whether collective consultation obligations are triggered,  currently where 20 or more redundancies are proposed at a single establishment within a 90-day period.
• Submit the HR1 notification to the Secretary of State before collective consultation begins. Failure to do so can result in significant penalties and personal liability for directors in some circumstances.
• Where required, appoint or arrange for the election of employee representatives before commencing collective consultation.
• Provide representatives with the statutory information required under the Trade Union and Labour Relations (Consolidation) Act 1992 at the outset of the consultation process.
• Consult meaningfully. Consultation must be undertaken with a view to reaching agreement and exploring ways of avoiding or reducing dismissals.
• Establish an appropriate selection pool and apply objective, non-discriminatory selection criteria consistently across affected employees.
• Record and retain evidence of all scoring decisions, consultation meetings and redundancy-related communications.
• Conduct individual consultation with affected employees alongside any collective consultation process.
• Consider suitable alternative employment opportunities where available and document any offers made.
• Do not issue notices of dismissal until the relevant consultation obligations have been satisfied.

How Davenport Solicitors can help

At Davenport Solicitors, we advise employers on redundancy and restructuring processes, from the initial planning stage through to individual dismissals and any resulting tribunal claims. If you are considering a redundancy exercise, take advice before you begin. Call us on 020 7903 6888 or email contact@davenportsolicitors.com