Introduction to redundancy and lay-offs

Redundancy Risks Escalate

Britain’s labour market is showing clear signs of strain. Payrolled employment has fallen for several consecutive months, vacancies remain below pre-pandemic levels, and the redundancy rate climbed to 4.9 per 1,000 employees in late 2025. Insolvency Service figures for the four weeks to mid-December already pointed to 33,392 potential job losses, the highest since early 2023.

The latest ONS snapshot for January underscores the acceleration. Hospitality and retail, still recovering from post-pandemic cost pressures and shifting consumer habits, recorded the steepest increases. These sectors are especially exposed because many operate with thin margins and large numbers of staff at single sites, precisely the threshold that triggers collective consultation duties.

At the same time, the legal landscape is tightening. The Employment Rights Act 2025, part of the government’s “Plan to Make Work Pay,” doubles the maximum protective award for breaches of collective redundancy rules from 90 to 180 days’ gross pay per affected worker. The change takes effect on 6 April 2026, only days after the Acas session. Employers who miscalculate the 20-employee trigger, fail to consult properly, or underestimate the scope of an “establishment” now face awards that can run into millions even for mid-sized exercises.

Non-obvious complications abound. Many firms maintain multiple sites or rely on agency and contractor labour to preserve flexibility; the single-establishment rule can still capture dispersed operations if the total meets the threshold within 90 days. Tribunals have shown increasing willingness to scrutinise consultation timelines and the quality of information provided. Meanwhile, the same government pushing stronger protections is presiding over fiscal consolidation that squeezes public-sector and supplier budgets, feeding private-sector restructuring. The result is a compressed window in which businesses must master stricter process rules amid rising volume of decisions they would rather avoid.