Key takeaways

• At present, employees are entitled to a protective award of up to 90 days' pay if their employer does not follow collective information and consultation procedures where the employer is making more than 20 employees redundant (or proposing fire and rehire, more formally known as dismissal and re-engagement) at any one establishment in any 90-day period. The Employment Rights Bill will amend the collective redundancy framework to remove the reference to establishments: once the amendment comes into force, the number of redundancies will be calculated according to employer, not establishment.
• The consultation asks for views on two alternative options: to increase the protective award that can be awarded by a tribunal from 90 to 180 days pay, or to remove the cap on the protective award entirely so the level of the penalty to the employer is at the discretion of the tribunal.
• Interim relief (an order by which the employment tribunal can order the respondent employer to reinstate or re-engage the claimant, or, where the employer is unwilling to do so, to continue to pay the claimant's salary and benefits, pending the full hearing) is only available for certain types of unfair dismissal claim.
• The government is seeking views on whether interim relief should be available to employees who bring claims for the protective award, and also to employees who bring an unfair dismissal claim in a fire and rehire situation under the new right introduced by the Employment Rights Bill (subject to the approval of Parliament).
• The consultation will close on 2 December 2024 and the government plans to make the change through government amendment to the Employment Rights Bill. The government also plans to conduct a further consultation exercise on strengthening the collective redundancy framework in 2025.
• For more information on the key provisions of the Employment Rights Bill, please click here.
• For advice or to discuss what this means for you and your business, please get in touch with your usual Baker McKenzie contact.

In more detail

Protective awards for failure to collectively inform and consult

An employer proposing to dismiss 20 or more employees at one establishment within a 90-day period or less has a statutory duty to consult the affected employees' representatives for a minimum of 30 to 45 days (depending on the number of redundancies) before the first dismissal. An employment tribunal may order the employer to pay a protective award of up to 90 days pay to employees if sufficient consultation does not take place. The size of the protective award is whatever is just and equitable, as determined by the tribunal, which takes account of what, if any, consultation did take place during the period before the dismissals. The award is punitive meaning that where there has been a complete absence of consultation, the starting point is 90 days' pay.

The government has recently laid an amending order in Parliament which (subject to approval) will mean that a tribunal can adjust any protective award by up to 25% if it finds that one of the parties has unreasonably failed to comply with a relevant Code of Practice, such as the Code of Practice on dismissal and re-engagement.

The consultation notes that most employers comply with their collective consultation obligations, but that in 2022/2023, there were 5,026 tribunal cases where employees failed to inform and consult on redundancies. In addition, some employers choose not to consult and instead "buy out" employees, by offering a higher termination payment to employees through a settlement agreement than they could receive by way of a protective award. It states that the aim of both options is to reduce any incentive for employers to avoid their obligations to consult with employees (through their representatives).

The consultation asks for views on two options:

• To increase the protective award that a tribunal can award from 90 to 180 days;
• To remove the cap on the protective award entirely. This would leave the level of award to the discretion of the tribunal. 

However, there would be no change for employees of insolvent businesses, where the government's Insolvency Service pays protective awards; in those cases, the cap on any protective award of eight weeks' pay would remain.

Under either option, the tribunal would continue to determine what is a "just and equitable" protective award, having regard to the circumstances and the severity of the employer's failure to pay.

Interim relief

Interim relief is a rarely used remedy which allows the claimant to continue to work (or if not work, to still receive salary and benefits) until the full hearing of their claim. It is only available in certain unfair dismissal claims (those under s128-132 of the Employment Rights Act 1996 and s161-166 of the Trade Union and Labour Relations (Consolidation) Act 1992. This includes whistleblowing cases. Applications are made within seven days of the claimant's dismissal, and considered by a tribunal shortly afterwards. If the application is successful, the tribunal would issue an order for the employer to either re-instate or re-engage the employee pending the final hearing; or, if the employer is unwilling to re-employ them, to continue to pay the employee their salary and benefits until the full hearing. A tribunal would only order interim relief in those dismissal cases which, on application, demonstrate that it is 'likely' that they were dismissed for the protected reason.

The consultation asks for views on extending the right to interim relief in two circumstances:

• Whether an employee who makes a claim for the protective award for failure to inform and consult in a collective dismissal scenario should be able to bring an award for interim relief. This would mean they are no worse off pending the hearing and would, the government consultation suggests, disincentivise employers from making a calculated decision to 'buy out' employees from their right to be consulted on proposed redundancies.
• Whether an employee who makes a claim for unfair dismissal in a fire and rehire scenario should also be able to bring an award for interim relief.

In both cases, the consultation asks whether any adjustments to the current interim relief process would be needed to ensure that interim relief for these cases can work effectively and be determined promptly by the tribunal.

The government is interested in both employer and employee views on the process, how this would work in practice, and how it might interact with any changes to the protective award. Responses to the consultation may inform changes to the Employment Rights Bill. Under "Next Steps" the consultation paper states that the government intends to gather further views on strengthening the collective redundancy framework in 2025, including consulting on doubling the minimum consultation period (from 45 to 90 days) where there is a proposal to dismiss 100 or more employees.