Collective consultation in a retail environment: Why getting the numbers right really matters 

As 2026 begins, UK retail faces another year of turmoil. The sector shed over 200,000 jobs in 2025 alone, with 17,349 stores closing their doors. Major names including Claire’s Accessories, The Original Factory Shop, L.K. Bennett and Bodycare have all entered administration in recent months, while established chains like Poundland, River Island and Pizza Hut have undertaken substantial restructuring programmes involving significant store closures and job losses. 

Around 50,000 UK companies are experiencing critical financial distress as of mid-2025, with retail identified as one of the worst-performing sectors. The pressure shows no signs of easing. For retail businesses navigating restructuring or facing difficult decisions about their workforce, collective redundancy consultation requirements represent a critical area of compliance. And it’s easy to get wrong. 

Miscounting which employees should be included, or misunderstanding when the obligation is triggered, can expose employers to tribunal claims and significant financial penalties when businesses can least afford them. 

What triggers collective consultation? 

Employers must undertake collective consultation when proposing to dismiss as redundant 20 or more employees at one establishment within a 90-day period. “Establishment” generally means a single site or workplace. Different store locations typically count as separate establishments. 

This matters particularly for multi-site retailers. A business closing several stores, each with modest staff numbers, might not trigger collective consultation at any individual location. But getting the calculation wrong can mean finding yourself required to consult when you thought you didn’t need to. That delays the entire process and creates additional obligations you hadn’t planned for. 

What collective consultation involves 

Collective consultation requires employers to inform and consult with employee representatives about proposed redundancies. Where there’s a recognised trade union, that’s who you consult. Otherwise, you’ll need elected employee representatives. 

The employer must provide specific written information. This includes the reasons for redundancies, numbers and descriptions of affected employees, the proposed method of selection, and the proposed timing. 

Consultation must be genuine and undertaken with a view to reaching agreement on ways to avoid dismissals, reduce numbers, or mitigate consequences. It needs to begin at least 30 days before any dismissals take effect. That extends to 45 days where 100 or more employees are involved. 

Common counting mistakes 

The 20-employee threshold isn’t limited to compulsory redundancies. It includes all employees dismissed for reasons of redundancy. Voluntary redundancies count towards the total. So do employees who are offered alternative roles but whose current positions are being made redundant. 

A retailer proposing 25 redundancies who assumes that voluntary redundancies or successful redeployments reduce the count may find themselves in breach of their consultation obligations. 

The timeframe also catches many employers out. The 90-day period covers all redundancies proposed within that window, not just those completed. Attempting to stagger redundancies across multiple smaller batches to avoid triggering consultation is unlawful. Tribunals take a dim view of such arrangements. 

For retailers with multiple locations, determining what counts as “one establishment” requires careful assessment. Separate stores usually constitute separate establishments, but there are exceptions. Tribunals will consider how closely locations work together, whether they share management structures, and the extent of operational integration. Regional clusters of stores with shared resources might be treated as a single establishment. That can bring what appear to be small-scale redundancies into collective consultation territory. 

The consequences of getting it wrong 

Failing to conduct proper collective consultation can result in a protective award of up to 90 days’ uncapped gross pay per affected employee. For a retailer making 50 employees redundant, with an average salary of £25,000, that represents a potential liability of over £300,000. 

Under the Code of Practice on Dismissal and Re-engagement (which came into effect in January 2025), tribunals can also uplift compensation by up to 25% where employers have failed to follow the Code. That potentially increases awards further. 

For businesses already managing cost pressures, such awards can be substantial. Beyond the financial penalty, getting collective consultation wrong can also delay restructuring plans significantly while the situation is rectified. 

There’s another requirement too. Employers must notify the government’s Redundancy Payments Service before consultation begins. Failure to do so is a criminal offence carrying an unlimited fine. 

Anticipated reforms 

The Employment Rights Act 2025 proposes significant changes to the collective consultation framework. However, the detail and timing of implementation remain subject to consultation and secondary legislation. 

The Act is expected to introduce an additional company-wide trigger for collective consultation, which would operate alongside the existing establishment-based test. This would capture redundancies across multiple sites where the total number meets a specified threshold, even if no individual site reaches 20 redundancies. The precise details of this threshold will be set out in secondary legislation following consultation. 

These changes are designed to address situations where businesses make substantial numbers of redundancies across their organisation, but avoid collective consultation by keeping numbers below 20 at each individual location. For multi-site retailers undertaking workforce restructuring, this could significantly expand when collective consultation is required. 

The Act also proposes to increase the maximum protective award from 90 days to 180 days’ pay. This change is not yet in force and remains subject to the implementation timetable. 

Businesses planning restructuring should monitor developments in this area carefully. The changes are likely to affect how redundancies need to be counted and managed across multi-site operations. 

Getting it right 

For retail employers facing difficult workforce decisions, accurate counting is essential. You need to understand which employees count towards the threshold, track all proposed redundancies across the relevant 90-day period, and carefully assess whether multiple locations might be treated as a single establishment for these purposes. 

You also need to begin consultation in good time, ensure employee representatives are properly informed and consulted, and follow the requirements set out in the Code of Practice on Dismissal and Re-engagement where relevant. 

The rules are complex, particularly around what constitutes “one establishment” and how the anticipated reforms may affect multi-site operations. Businesses considering restructuring should take specialist employment law advice early in the process. 

The cost of getting collective consultation wrong can significantly exceed the investment in getting it right from the outset. 

About the Author: Steph Marsh is the Head of the Employment Law team at Coodes Solicitors. She has extensive experience in supporting both employers and employees on contentious and non-contentious matters, particularly surrounding discrimination issues, redundancy situations and data protection law. 

Get in touch: steph.marsh@coodes.co.uk  01579 324 017