Navigating Change: Redundancies in the Living Sector and the ERB

The Employment Rights Bill (ERB) proposes a fundamental shift in how collective consultation obligations are triggered, with significant implications for employers in both the living and retail sectors.

The current obligation

Currently, the duty to consult collectively arises when an employer proposes 20 or more redundancies at a single establishment within a 90-day period.

In USDAW and another v WW Realisation 1 Ltd (in liquidation), Ethel Austin Ltd and another (C-80/14) (commonly known as the Woolworths case), it was held that an ‘establishment’ is the local unit or entity to which workers are assigned to carry out their duties. For the last ten years, businesses have operated on the basis that proposed redundancies across different establishments will not necessarily trigger collective consultation obligations. This has worked as a sensible approach for many businesses operating across numerous properties around the country, particularly, for example in the retail sector which tends to have several stores with low numbers of employees.

If the obligation is triggered, then collective consultation must be carried out with elected employee representatives or trade union representatives. The Secretary of State must also be notified by way of an HR1 form.

Proposed changes

The original draft of the ERB removed the words “at one establishment” which would have had a significant impact on employers. The duty to collectively consult would have been more easily triggered, which would have in turn led to increased costs and administrative burdens. This would have required a significant level of coordination across different parts of the business and caused potential logistical nightmares.

Having heeded the warnings from employers, the government have changed tact and have re-inserted the reference to “one establishment” into the ERB. Instead, the proposed change is to introduce an additional threshold based on the total number of redundancies proposed across the entire business, regardless of location.

This company-wide threshold is expected to apply where redundancies represent a certain percentage of the employer’s total UK workforce. While the exact percentage is yet to be confirmed, early indications suggest it could be as low as 5% or 10%. This means that even relatively small-scale restructures, when aggregated across multiple sites, could trigger collective consultation obligations. For example, a care provider with 400 employees proposing 20 redundancies across 10 different homes could now fall within scope, even if no single site meets the current “establishment” test.

This change is particularly relevant to the living sector, where employers often operate across dispersed locations, for example supported living schemes, extra care housing, or residential care homes. These services are frequently subject to local authority commissioning cycles, funding changes, or service redesigns, which can lead to piecemeal workforce adjustments. Under the new rules, employers will need to monitor redundancies across all sites in real time to assess whether the cumulative total meets the new threshold.

The retail sector faces similar challenges. With large workforces spread across numerous stores, warehouses, and distribution centres, retailers often implement localised restructures in response to shifting consumer demand, seasonal trends, or store closures. Under the new rules, these decentralised decisions could now trigger collective consultation obligations at a national level. This will require retailers to centralise their redundancy tracking and consultation planning, potentially slowing down operational agility and increasing legal exposure. For both sectors, the reforms underscore the need for robust internal governance and early legal input when planning workforce changes.

It may help that the ERB also introduces some flexibility by allowing employers to consult with different employee representatives separately, rather than requiring a single unified process. However, while this may offer practical benefits in multi-site operations, it also introduces complexity and the risk of inconsistent outcomes.

Increased protective award

The ERB doubles the maximum protective award for failure to consult from 90 to 180 days’ pay per affected employee, this is a substantial increase to the financial risk of non-compliance. This is intended to act as a deterrent but could prove costly for employers who misjudge their obligations or fail to aggregate redundancies correctly. This further highlights the importance for clear communication and coordination across the business as a whole.

Employees will also still be able to bring claims for unfair dismissal within the proposed extended period of 6 months from the date of termination (increased from the current 3-month time limit). Any awards made for successful unfair dismissal claims will be an additional cost to a potential protective award.

Managing the change

For the living and retail sectors, these reforms demand a more strategic and coordinated approach to workforce planning. Employers will need to implement centralised systems to track redundancy proposals across all locations, ensure early identification of consultation triggers, and maintain clear records of employee numbers and proposed changes. They may also need to establish or refresh standing employee representative bodies to ensure readiness for consultation.

The government has confirmed it will publish collective consultation guidance in due course, this will be a key document for all employers seeking to make redundancies once the changes come into effect.

In all cases, we recommend taking legal advice at an early stage so that the necessary steps can be taken. Please speak to any of our employment team if you would like expert advice on collective consultation and the potential impact of the ERB on your business.