Protective awards: the cost of failing to consult

The maximum protective award that a UK employer now faces is 180 days’ gross pay per affected employee, for failing to meet collective redundancy consultation requirements. If you multiply that by the number of employees affected, that financial exposure can quickly become astronomical. 

The protective award increased significantly from 6 April 2026, doubling from 90 to 180 days’ pay under section 30 of the Employment Rights Act 2025, which amended section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

This change reinforces the importance of ensuring that your business follows the proper collective consultation process. Failure to do so can lead to a significant tribunal award, additional legal costs, disruption across management, and lasting damage to employee trust and the company’s reputation.

So, if you’re looking to make changes to your business, ensure that you build consultations into the restructuring plan from the start, instead of attempting to repair a flawed process after decisions have been made.

A protective award is an employment tribunal award which requires an employer to compensate employees affected by a failure to comply with collective redundancy consultation requirements. This is not the same as statutory redundancy pay, compensation for unfair dismissal, or a discretionary payment offered as part of a redundancy package.

Under section 188 of TULRCA, employers must consult appropriate employee representatives if they are proposing to make 20 or more staff redundant at one establishment within a 90-day period. These existing rules apply across England, Scotland, and Wales. The consultations must begin in good time, which is at least 30 days before the first proposed dismissal takes effect when there are 20 to 99 redundancies proposed, or at least 45 days when 100 or more are proposed.

This obligation isn’t just about telling employees that redundancies are going ahead. The consultations should cover ways to avoid redundancies, how to reduce the number of employees affected, and how to mitigate any consequences, with a view to reaching agreement with employee representatives.

Crucially, it must start when redundancy proposals are still being discussed. You can’t announce the final decision and then invite feedback. It doesn’t work like that, and certainly doesn’t count as a meaningful consultation. Having a sound business argument for a reduction in the workforce doesn’t remove the obligation to follow the correct procedure.

The increase, introduced on 6 April 2026, changes the potential cost of non-compliance. The maximum protected period of 180 days is equivalent to about 26 weeks of pay. Take an employer proposing the redundancy of 40 members of staff who each earn £600 a week, for example. 

If a tribunal awards the maximum protected period, the potential calculation would be:

• Number of affected employees: 40
• Weekly pay per employee: £600
• Maximum protected period: 26 weeks
• Potential award per employee: £15,600
• Potential cost: £624,000

While this isn’t a prediction of what a tribunal would award in a specific case, it illustrates the potential exposure, using stated weekly pay. The actual award will depend on the tribunal’s assessment of how badly the employer acted, plus the circumstances of the case, so it could be lower than the maximum.

However, it does show why consultation failures should be treated as a financial risk during the restructuring process. An organisation could easily manage redundancy costs, preserve cash flow, and work to a tight timetable, only to come face-to-face with an additional liability because the consultation process was poor.

Employers should take note that protective awards can be made when employees have less than 2 years’ service, so they aren’t only confined to employees who qualify for unfair dismissal claims. And the potential cost isn’t limited to the award itself. Organisations can face legal advice and representation costs, time spent preparing for proceedings, disruption to the restructuring timetable, and reputational consequences.

The 180-day rule is the maximum award, not a one-size-fits-all award. Under section 189 of TULRCA, the tribunal determines a protected period that is just and equitable across all circumstances. The main issue being dealt with is the extent to which the employer failed to meet its consultation obligations. An overall failure to consult will be viewed much more seriously than a case where the employer made genuine efforts to comply.

Tribunals usually approach serious failures starting with the maximum award, and then consider if there’s a way of reducing it. But employers shouldn’t assume that a less serious breach will automatically result in a modest award. Quality, timing, and substance of the consultation are taken into account, so if an employer made an effort to hold meetings or circulate documents, it doesn’t necessarily mean they complied.

Business leaders and HR teams need to show that consultations took place, and that these were genuine. 

Ask yourself these questions:

• Were representatives given relevant information?
• Were they allowed enough time to consider it?
• Were alternative proposals considered properly?
• Can the organisation explain how it responded to any points raised?

Building a compliant consultation process into any restructuring plan before committing to any redundancies is the most effective way to reduce the risk of a protective award.

1. Identify the trigger early

Review proposed redundancies across each establishment within the 90-day period. When calculating the correct figures, don’t forget to include voluntary redundancies and employees who may be redeployed or moved into alternative roles. Don’t stagger dismissals to avoid the consultation requirements.

2. Start consultations before decisions are finalised

Adhere to statutory minimum periods by building sufficient time into the project plan, while allowing for a longer process if the scale or complexity of the proposal requires it.

3. Keep employee representatives informed at all times

Ensure written information is provided and that representatives have the opportunity to consider proposals, ask questions, and put forward alternatives.

4. Keep a clear record

Carefully document meetings, proposals, questions, responses, and the reasons for decisions. Record which alternatives were considered and why they were accepted or rejected. A clear audit trail helps demonstrate that consultations were genuine.

5. Explore alternatives to redundancies

Consider whether changes to the proposed structure, a reduced number of dismissals, or redeployment could avoid job losses. This is part of the purpose of the consultation, as well as being a practical workforce planning exercise.

6. Coordinate HR, leadership, and legal advice

Senior decision-makers must fully understand the consultation timetable and avoid announcing final decisions prematurely. If the proposed process is complex, opt to take employment law advice, rather than waiting for a dispute to arise. 

If a restructure involves dismissing employees and offering to re-engage them on different terms and conditions, employers must look at the separate code of practice on dismissal and re-engagement.

If an employer unreasonably fails to comply with the code, an employment tribunal can increase the protective award by up to 25%. The code doesn’t apply to redundancy dismissals as such, and the 25% uplift is not an automatic addition to every protective award.

For employers considering changes to contractual terms, it’s best to treat dismissal and re-engagement as a last resort, make genuine attempts to reach an agreement, and follow the correct consultation requirements. If this approach is being considered, the HR department should review the code before finalising any decisions.

A common misconception flying around at the moment is that insolvency or financial distress excuses an employer from collective consultation. It doesn’t. The legislation recognises a limited defence where certain circumstances make it unreasonably practical to comply with certain consultation requirements. However, the employer must prove that the circumstances prevented compliance and that the company took all reasonable steps towards meeting obligations.

As Acas explains, a sudden and unexpected insolvency might qualify in some circumstances. But an organisation that has experienced financial difficulties for a long time shouldn’t assume that insolvency or a cash-flow crisis will excuse a failure to consult.

What counts as special circumstances? Any that arise aren’t defined in law, and each is taken on a case-by-case basis.

Acas and government guidance state that the higher maximum applies to dismissals taking effect on or after 6 April 2026. But what if consultations began before that date but dismissals happened on or after it? 

Some legal commentary has highlighted uncertainty about how the change applies in these circumstances. Employers shouldn’t assume that the date any consultation started will determine which time period applies i.e. the previous 90 day rule or the updated 180 day rule. Nor should they assume that the dismissal date resolves every question in a case that spans the change. 

If your restructuring timetable crosses over this date, it’s wise to take advice on specific facts before estimating potential liability or making decisions based on the applicable maximum. 

As mentioned, the current collective consultation is based on 20 or more proposed redundancies at one establishment within a 90-day period. But the government is planning an additional organisation-wide threshold, expected to take effect in 2027, which is subject to secondary legislation. This change is intended to address situations where large numbers of redundancies are spread across multiple establishments, where each site falls below the existing threshold.

The precise threshold and how it will operate hasn’t been settled yet. Government proposals are considering either a fixed threshold or a tiered approach, so employers shouldn’t treat either option as the law. Nevertheless, organisations with multiple sites should take the time to review how they track proposed redundancies across the business. A process that just looks at individual locations may become insufficient once this additional threshold takes effect.

A protective award is a direct financial consequence, but it isn’t the only cost of a mishandled redundancy consultation. A Redundancy Communications Report by Careerminds found that 53% of remaining workers say their trust in leadership decreased after poor redundancy communication. This is a stark warning for employers, showing how the effects of a poorly handled restructure extend beyond departing employees. Those who remain stay vigilant to how leadership behaves, whether decisions are explained clearly, and whether colleagues are treated with respect.

Supporting employees through uncertain times isn’t just about meeting legal obligations, but about maintaining the confidence of the remaining workforce, protecting inside knowledge, and demonstrating that the organisation’s stated values apply when difficult decisions are being made.

Offering outplacement, as a starter for 10, sends the right message to departing employees by giving them career support, CV advice, and a better chance of landing a new role, while showing remaining workers that the organisation looks after its own.

A compliant redundancy process requires clear planning, meaningful consultations, viable alternatives, and practical support for employees affected by change. The right support can bring these elements together, from workforce planning and redeployment through to career development and transition services.

Careerminds boasts a 99% client retention rate, reflecting the value that organisations place on an ongoing partnership that supports them through workforce change.

If your organisation is planning redundancies, or you’re concerned that a consultation process is already exposed, it’s time to review the plan, identify gaps, and establish what can be done to address them.