Employment Law Coffee Break: Collective consultation, preparing for April 2026, and what's on the horizon

EAT holds trigger for collective consultation obligations on redundancies is forward looking only

The Employment Appeal Tribunal (EAT) has issued an important decision on the collective redundancy consultation obligations under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) (collective obligations).

Determining whether there is a proposal to dismiss 20 or more employees within 90 days

In determining whether or not an employer had triggered the consultation obligations under TULRCA (whether there was a proposal to dismiss 20 or more employees within 90 days), an employment tribunal considered a previous ECJ decision (Marclean) and found that this required an employer to "look backwards as well as forwards" when assessing whether the trigger had been met.

The EAT held that the tribunal had misdirected itself in interpreting Marclean in this way. Marclean is not about when an employer is "contemplating" dismissals under the relevant provisions of the applicable directive and should not therefore be read as affecting the interpretation of "proposing" in TULRCA. To the EAT's mind, the language of section 188 and the structure of TULRCA is clear – it looks to whether the employer is proposing to dismiss as redundant 20 or more employees within 90 days, a necessarily prospective question based on the employer's plans.  

The EAT emphasised however that what actually happens subsequently will often be "highly relevant" evidence of what an employer was proposing in the past. Tribunals should scrutinise carefully the evidence where an employer in fact dismisses 20 or more employees within a period of 90 days but denies this was something it was at any stage "proposing" in the past; it should be astute to see through artificial divisions of dismissals into batches and deliberate delaying or staggering of dismissals to circumvent section 188.

The EAT also clarified that "proposing" is not tied to a single moment in time – there is no reference to a single decision or "a proposal". An employer who proposes, say, six dismissals on Monday, seven on Tuesday and eight on Wednesday may readily be said to be "proposing" 21 redundancies that week. An employer cannot therefore avoid the duty by incrementally increasing proposed dismissal numbers over several days or weeks.

Identifying the employer proposing the dismissals

The EAT also considered that the tribunal had erred in considering whether the respondent employer acted as the "de facto" employer for all UK staff when determining if the section 188 trigger was met.

It held that in the context of a corporate group there must be a contractual link between the employees whom it is proposed to dismiss and the corporate employer which is subject to the duty under section 188. The collective consultation obligation falls on the entity which employs the employees, not a parent company or a group as a whole. The tribunal should therefore have focused only on employees who had employment contracts with the specific legal entity.

However, the EAT confirmed that section 188 does not require a single proposal by a single department. An employer as an entity may properly be said to be "proposing" dismissals where that is the result of a combination of separate decisions by departments or individuals within that employer. To hold otherwise would undermine the protective purpose of the legislation and provide an easy means of avoiding consultation obligations.

What does this mean for employers?

This is a significant decision for employers looking to make collective redundancies. While helpful in enabling employers to potentially narrow the circumstances in which the collective consultation obligations are triggered, employers should remain alert to the warning from the EAT that tribunals should scrutinise proposals diligently to ensure that an employer is not manipulating the rules to avoid collective consultation.

The EAT noted here that the tribunal found that there was no reliable evidence from the employer's witnesses on the background to the collective consultation or the number of employees it proposed to dismiss; these matters were not addressed in witness statements and on cross-examination, vague and unsatisfactory answers were given.

Employers should ensure that clear and contemporaneous records of decision-making processes are made as these will be even more important once the ability for a tribunal to award a larger protective award (doubling the current 90 days' pay per affected employee to 180 days' pay) for each employee comes into force from April 2026 and the increased limitation periods for bringing tribunal claims come into force in October 2026. In this case, the EAT confirmed that a proper approach where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the tribunal considers appropriate, such as where the employer had a genuine and reasonable belief (supported by evidence) that the section 188 thresholds were not met.

In light of the current significant employment law reforms with the doubling of the protective award (from April 2026), the removal of the compensation on unfair dismissal (expected January 2027) and the introduction of a new and additional trigger for the collective redundancy obligations to apply, all against the backdrop of provisions enabling greater trade union engagement in workplaces, employers carrying out workplace redundancies are likely to come under increasing legal scrutiny.

Preparing for April 2026: What do employers need to know and do?

Employment Rights Act 2025

The Employment Rights Act 2025 received royal assent in December. With indications that the government is currently sticking to its current roadmap for implementation, 6 April will see a number of reforms coming into force:

• doubling of maximum protective award from 90 to 180 days' pay per affected employee for collective redundancy consultation failures;
• statutory sick pay payable from day one of absence with the removal of the lower earnings limit;
• statutory paternity leave and unpaid parental leave become day one rights and employees will be entitled to take paternity leave before or after shared parental leave;
• protected disclosures will be expressly extended to include sexual harassment concerns;
• simplified processes introduced for trade union recognition; and
• electronic and workplace balloting provisions introduced. 

Combined with rising minimum wage costs and employer national insurance contributions, the new rights around statutory sick pay will increase the already significant cost pressures on employers. Employers will need to factor sick pay costs into budgets, as well as revising sickness, family leave and whistleblowing policies and review collective redundancy processes for compliance in light of the increased risks.

The new Fair Work Agency is also set to launch in April 2026 to tackle enforcement of minimum wage, holiday and sick pay, labour exploitation and agency worker rights; however, it remains to be seen how quickly this will be operational from a practical perspective.

Read more detail on the new rights coming into force under the Employment Rights Act, the impacts and actions for employers and the timeline for implementation.

Changes to statutory minimum pay rates and family leave rates

As previous announced, from 1 April 2026, the national minimum wage rates per hour will increase as follows:

• Workers aged 21 and over: an increase from £12.21 to £12.71.
• Workers aged 18 to 20: an increase from £10.00 to £10.85.
• Workers aged 16 to 17 and apprentices: an increase from £7.55 to £8.00.

April 2026 will also see the weekly rate of statutory maternity, adoption, paternity, shared parental, neonatal care and parental bereavement pay, as well as maternity allowance, increase to £194.32 (from £187.18). At the same time, the lower earnings limit (the weekly earnings threshold for qualifying for the above payments, except maternity allowance) will rise to be £129 (up from £125). The rate of statutory sick pay will also increase from £118.75 to £123.25.

Umbrella company tax legislation

The 6 April 2026 will also see the new umbrella company tax legislation come into force, introducing joint and several tax liability between umbrella company and agency (or in some cases, end hirers) for any failure by the umbrella company to pay full PAYE and NICs to HMRC.

What's on the horizon

More employment law reforms

It will be important for employers not to lose sight of the Employment Rights Act reforms currently expected to come into force towards the end of 2026/start of 2027 and to take appropriate steps now. For example, employers should start carefully considering the impact of the changes to the unfair dismissal qualifying period and ensuring appropriate probationary periods and other measures around recruitment and performance are put in place to mitigate risk. Likewise, employers should look at existing contract terms and consider what changes may be needed in light of the more restrictive obligations on fire and re-hire provided for in the Act. 

Our microsite sets out more detail on the reforms, the current implementation dates and the impacts and actions for employers.

Employers should also monitor ongoing consultations closely, as these will shape the detailed operation of a number of the new rights in the Act. Several consultations are currently under way or recently launched:

• draft code of practice on electronic and workplace balloting (closes 28 January 2026);
• enhanced protections for maternity dismissals (closes 15 January 2026);
• the right to bereavement leave (closes 28 January 2026); and
• rights for unpaid carers (review expected to conclude by end of 2026).

The government has indicated that numerous further consultations will be issued throughout 2026, shaping the detailed regulations that will govern how many reforms operate in practice.

While not part of the Employment Rights Act, the government is expected to publish a consultation on reforms to the existing employment status framework early this year. Further developments on the draft Equality (Race and Disability) Bill are awaited, following the government's consultations and call for evidence last April 2025. In line with the government's Make Work Pay paper, the bill is set to introduce a number of reforms to strengthen discrimination laws including mandatory ethnicity and disability pay gap reporting, as well as extending equal pay rights to race and disability discrimination. 

Read more >

Reform of non-compete clauses

Of significant interest to employers will also be the government's working paper seeking views on reforms to non-compete clauses (closing 18 February 2026). The paper highlights how non-compete provisions can restrict employee movement, limit knowledge transfer and undermine innovation. Options for reform include: statutory time limits (potentially varying by company size – three months for 250+ employees, six months for smaller firms); outright bans; bans below salary thresholds to protect lower-paid workers; or combining salary threshold bans with three-month limits for higher earners. As part of its considerations, the government is examining international approaches, as well as whether high legal costs deter employees from challenging restrictive covenants which are in place.

It is not clear yet what the government's timescale for legal reform would be (should this be an outcome from its review), but employers should take the opportunity now to review existing non-competes and consider alternative protections, such as non-solicitation clauses, confidentiality provisions and garden leave arrangements. 

You can read more of Osborne Clarke's predictions for 2026 here.