Modernising the law on collective redundancies in a remote working world

As the Employment Rights Bill edges closer to becoming law, proposals to modernise legislation on collective redundancies are attracting particular interest among HR teams and employment lawyers. 

The planned reforms aim to align the law with the realities of today's working world, but questions remain over whether they really reflect the trend for remote working and if the right areas are being prioritised.

Outdated frameworks

The current collective redundancy rules have their roots in the 1970s, when home working was virtually unheard of.

The key concept underpinning the legislation – namely the ‘establishment’ where an employee works – has become increasingly strained in an era of hybrid and fully remote work.

Traditionally, ‘establishment’ has meant the unit to which employees are assigned, typically an office, factory or store.

However, for remote employees who may live hundreds of miles from their employer's registered office, it is unsurprising that employment law and HR professionals are pondering whether that concept still makes sense.

To date, UK courts have not tested how remote workers fit into the definition of ‘establishment’. What is clear is that the law was not written with them in mind.

For redundancies affecting a fully remote workforce, tribunals are unlikely to find that each employee has their own separate establishment, even though home is where they physically work.

In practice, this means tribunals are more likely to ‘attach’ remote employees to a business location, often the company’s main (or nearest) office.

For employers with a single UK site, this means all home-based staff will probably be treated as part of that one establishment. It may feel counterintuitive, particularly when workers live far from their offices and each other, but it remains the safest and most logical approach in the absence of case law to the contrary.

As yet, there is nothing in the Employment Rights Bill to address this issue.

Some employers with multiple UK offices have explored whether they can align remote workers with different ‘business groupings’ or internal structures, effectively creating artificial establishments.

However, for other employers, especially those with only one physical location, this is not an option.

Modernising the process

The HR1 form, a legal document used to notify the UK Government of proposed collective redundancies involving 20 or more employees at a single establishment within a 90-day period, which must be submitted to the Secretary of State for Business and Trade via the Insolvency Service, is also undergoing a long-overdue review.

The new digital HR1 form promises to streamline the notification process and bring the reporting system into the 21st century.

Employers are now able to complete and submit the HR1 form entirely online through the existing government portal, as well as via a new dedicated HR1 link.

It is envisaged that the digital process will modernise reporting as the Government seeks to improve oversight and data capture, ensuring employers are working with the most up-to-date version of the form and minimising opportunities for errors.

Looking ahead

The Employment Rights Bill offers an opportunity to bring redundancy law up to date with how people actually work.

At present, the trigger for collective consultation is when the employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

Under the Bill, the trigger will become either:

• 20 or more employees at one establishment; or
• at least the ‘threshold number of employees’.

The Government would have power to make regulations specifying this threshold, which could be a particular number, a particular percentage of employees or calculated in some other way.

No matter the method of calculation, the provision will stipulate that the threshold number must not be lower than 20 employees.

The Government plans to introduce these changes in 2027. While the Bill introduces new consultation thresholds, it does not revisit the definition of ‘establishment’, a concept that continues to present challenges in the context of remote and hybrid work.

Judicial consideration of how this applies to remote workforces is likely in the coming years, and a trend towards bringing people back into the office may mitigate some of the urgency to update the law if it continues, but for now, employers will need to navigate the existing uncertainty.

Sarah Jackman is an employment law counsel at Dentons.