One of the most simple and straightforward provisions of the Employment Rights Act 2025 is also one of the most consequential – at least for larger employers. Section 30 makes a change to S.189 of the Trade Union and Labour Relations (Consolidation) Act 1992 doubling the maximum level of the protective award from 90 days to 180 days.

The protective award is an odd thing in UK employment law. It is made when a Tribunal finds that an employer has failed to carry out proper consultations with employee representatives in relation to a collective redundancy exercise. There are two things about the protective award that are particularly unusual. 

The first is that it is typically a representative action. If appropriate representatives are in place – for example, a recognised trade union – and the employer fails in its duty to consult them, then the claim is brought by the representatives or the relevant trade union rather than by the individuals who are dismissed. The protective award is then made in favour of the individuals they represent and who have been made redundant – even though they themselves have not brought a claim and might not even be members of the trade union that has brought the proceedings.

The second unusual thing is that the protective award is punitive. It does not seek to compensate employees for what they have lost but to punish employers for what they have done – or rather, failed to do. 

This history of the protective award is complex, but I think it is interesting so strap in. Rules on collective redundancy consultation were first introduced by the Wilson Government in the Employment Protection Act 1975. They were designed to implement a European Directive from 1975 but in those days we had a rather vague notion of the impact of European law and the way in which the Government went about implementing the Directive would cause problems some 20 years later. 

The 1975 Act provided that an employer who was proposing to dismiss 100 or more employees had to begin consultation with any recognised trade union at least 90 days before the first dismissal took effect and an employer proposing to dismiss 10 or more employees had to begin consultations at least 60 days in advance. If fewer than 10 employees were being dismissed then the consultation simply had to begin ‘at the earliest opportunity’.

The protective award was described as an order by the Tribunal for the employer to continue paying remuneration to employees who had been dismissed or who were about to be dismissed in contravention of these requirements. The award was limited to 90 days’ pay where the consultation period was set at 90 days – and 60 days pay where the consultation period was 60 days. In cases of fewer dismissals, the maximum protective award was set at 28 days. 

Things were very different back in the 70s and it is clear that the assumption was that a union would be able to get in front of the tribunal really quickly. The protective award was designed to protect the employees from being dismissed before the consultation period was complete. Nowadays that never happens. I have never seen a case in which the protective award covered employees who were still in post. By the time they get to the Tribunal, the dismissals will have taken effect long ago.

Over the years the collective redundancy provisions were amended. Within a couple of months of the 1979 Election the Government had introduced Regulations reducing the consultation period when there were to be between 10 and 100 dismissals from 60 days to 30. The protective award in such cases was also capped at 30 days rather than 60.

The big change, however, was prompted by Europe. The UK was held to be in breach of the Collective Redundancies Directive by the European Court of Justice in 1994. The Court held among other things that UK law could not limit collective consultations to cases where there was a recognised trade union in place. The Government responded with Regulations in 1995 providing for elected representatives but also – as permitted by the Directive – introducing a threshold of 20 proposed redundancies at a single establishment before any duty to consult representatives applied.

The law was then amended by the Labour Government in 1999 abolishing the lower maximum protective award in cases where the employer proposed dismissing between 20 and 100 employees. The protective award was now capped at 90 days’ pay in all cases involving a breach of the collective consultation provisions no matter how long the consultation period was. The link between the protective award and the consultation period was further eroded in 2013 when the Coalition Government reduced the 90 day consultation period to 45 days but kept the maximum protective award at 90 days. 

The result is that the 90 day maximum has no relationship with the duration of the consultation that the employer is required to undertake. The award is no longer even pretending to offer a period of protection during which wages are paid while consultations take place. So an employer proposing to make 20 redundancies should begin consulting representatives at least 30 days before the first dismissal occurs – but faces having to give any dismissed employees up to 90 days’ pay if it fails to do so.

Nor is the amount of the award concerned with the personal circumstances of the employees who have been dismissed. An employee who is fairly dismissed for redundancy and walks straight into a better paying job with no time spent out of work will still receive a protective award if the employer failed in its duty to consult. The Tribunal must award an amount that is just and equitable having regard to the ‘seriousness of the employer’s default’ (S.189(4)(b)) rather than any losses suffered by the employee. That means that if an employer completely disregards the duty to consult then a 90-day award is likely. If the breach is more technical than substantial then a much lower figure would be appropriate. 

So what the 2025 Act does is double the risk faced by an employer obliged to engage in collective consultations over redundancy. In large-scale redundancies the financial implications of this are significant – and they are supposed to be. P&O has a lot to answer for here. When they sacked 800 employees in 2022 without engaging in any meaningful consultation, they were making a deliberate calculation. They must have judged that the amount they would save from acting quickly would outweigh the amount they would have to spend in paying out compensation to the dismissed employees. The sight of a large employer disregarding its legal obligations because it could afford to do so made a firm and lasting impression. The doubling of the limit on protective awards is designed to change the economics of situations like that and persuade more employers to engage in consultation rather than opt-out and pay-out. It is hard to argue with the logic.

The Government has said that it will implement this increase in the protective award in April this year. There is no reason why they should not keep to that timetable. No further Regulations are needed and I don’t see any need for a consultation on the issue. It’s good that at least one provision of the Employment Rights Act 2025 is so straightforward.