The government has confirmed it will table an amendment to the Employment Rights Bill to double the maximum protective award from 90 to 180 days’ pay where an employer fails to comply with collective redundancy obligations, for example, in fire and rehire situations.
In its response to a consultation on strengthening the remedies against abuse of rules on collective redundancy and fire and rehire, the government said it had decided to take a “balanced approach”.
One consultation question asked whether the protective award should be increased. Most respondents (61%) said it should not. Employers and business groups opposed such a policy, saying that raising the protective award period could create uncertainty.
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However, many respondents representing employees preferred removing the cap on protective awards entirely. Most trade unions and individual employees argued that the current collective redundancy framework is too easily abused, and there is an inadequate penalty for employers when they breach obligations.
The government said it believes there remained the need to ensure that employers do not find it financially advantageous to deliberately ignore their legal and moral obligations.
In a written statement to the House of Commons, Jonathan Reynolds, business and trade secretary, said: “Increasing the maximum value of the award means an employment tribunal will be able to grant larger awards to employees for an employer’s failure to meet consultation requirements.
“The government wants to enhance the deterrent against employers deliberately ignoring their collective consultation obligations and ensure it is not financially beneficial to do so.”
‘Pricing in’ non-compliance
In its response to the fire and rehire consultation, which opened in October, the government said: “Employers who avoid their collective redundancy obligations remove the opportunity to prevent or reduce the volume of redundancies via consultation. This means employers lose valuable staff and employees have their livelihood put at risk.
“Moreover, employers should not be able to pick and choose when to fulfil their legal obligations, nor should it be financially beneficial to ‘buy-out’ employees from their rights or ‘price in’ the cost of non-compliance.”
It added that it wants to ensure that employers will not be able to deliberately ignore their obligations, and it should never be the case that it is financially beneficial to do so.
“For that reason, the government believes increasing the maximum period of the protective award to 180 days is the most proportionate response to address these scenarios,” said the response.
Employment tribunals will continue to have discretion to vary the length of the protected period, up to a maximum of 180 days, having regard to the seriousness of the employer’s actions, as well as any mitigating factors.
The government added that it will issue further guidance for employers of all sizes on the consultation process for collective redundancies in due course.
Interim relief
However, a proposal in the Employment Rights Bill consultation that interim relief should be available in claims for protective awards and claims for unfair dismissal on grounds of fire and rehire will not be taken forward.
The government said it does not currently believe that interim relief would be an effective remedy to strengthen compliance or deliver additional benefits. Various respondents to the consultation stated that it would be challenging to compile the complex evidence required to bring forward a claim within the time limit to apply for interim relief, and the remedy is therefore unlikely to be effective.
It said the measure would cause increased pressure on tribunals, employees and employers when taken alongside the other changes proposed in this area.
The government passed legislation in 2024, meaning that where an employer has not followed the Code of Practice on Dismissal and Reengagement, the employment tribunal may apply an uplift in compensation of up to 25% to a protective award. This came into effect on 20 January 2025.
As the protective award is being doubled from 90 to 180 days, the 25% uplift could increase this by 45 days’ pay compared to the current 22.5 days.
“The government’s view is that this combination provides an effective remedy to strengthen compliance with collective consultation obligations,” it said in its response. “However, it intends to monitor the level of compliance in light of the doubling of the protective award and will consider if further measures are necessary should this prove not to be a sufficient deterrent.”
Despite the strengthening of the Employment Rights Bill, some unions believe the government should have gone further. Unite general secretary Sharon Graham said: “The government will come to realise that not introducing an outright ban on fire and rehire is a mistake. The new rules will continue to allow the most unscrupulous firms to use this disgraceful practice. Fire and rehire should be banned outright – no ifs or buts.”
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