Employment Rights Act: updates on collective redundancy, trade union reform and unpaid internships

The Employment Rights Act 2025 (ERA 2025) introduces major reforms that will reshape the employment law landscape. We are hosting a free webinar on the changes at 1.00pm on Wednesday 11 March 2026 – if you would like to attend, please register here.

The reforms will be phased in until 2027, with the first changes taking effect in April 2026. For more detail on timing, see our article 'The Employment Rights Act 2025: a timeline of February and April reforms'

This article summarises some recent developments, including:

• two government consultations on changes under ERA 2025; one on the new threshold for collective redundancy obligations and another on protection from detriment for taking industrial action;
• updated Codes of Practice on picketing and industrial action ballots and notice to employers;
• an update on a proposed ban on unpaid internships; and
• the government's gender pay gap and menopause action plans.

Consultation on new threshold for collective redundancy obligations

Currently, employers must collectively consult and notify the Secretary of State if they propose 20 or more redundancies at one establishment within 90 days. Failure to do so can result in a protective award of up to 90 days' pay per affected employee, a criminal sanction and unlimited fine.

From 2027, the ERA 2025 introduces an additional trigger, meaning that collective redundancy obligations will also be required when proposed redundancies across the employer's entire organisation reach a new threshold. The government is seeking views on how that threshold should work. The consultation closes on 21 May 2026.

Proposed models for the threshold

Single fixed number (preferred by government)

A simple threshold applying to all employers. The government notes that the threshold must be set high to avoid large employers being in a constant state of consultation. The government suggests a fixed number between 250–1,000 proposed redundancies and asks for views on what level this should be set at.

Percentage of employees

The threshold would be based on a percentage of the employer's UK workforce. This reflects employer size, but the government believes it risks letting the largest employers make substantial redundancies without triggering collective redundancy obligations. Calculating the percentage is also complex.

Tiered fixed thresholds based on employee numbers (government's second preference)

Different thresholds would apply depending on employee numbers, eg:

• 250 redundancies for organisations with zero–2,499 employees;
• 500 for those with 2,500–9,999 employees; and
• 750 for those with 10,000 or more employees.

The government notes that this brings in proportionality but risks "cliff edges" for employers just above or below a tier boundary. To determine which tier applies, the government proposes calculating employee numbers on 5 April each year.

Combination model

This approach combines a percentage threshold for smaller employers with a fixed number threshold for larger employers, ensuring collective redundancy duties are triggered in a proportionate way for medium sized businesses while still keeping an upper cap so that the largest employers cannot avoid obligations.

This mirrors some EU countries but is the most complex and the government believes it risks unnecessary disputes and burdens on employers..

Key takeaways for employers

• The proposed thresholds are higher than many commentators anticipated, indicating that the government understands that employers are concerned about low thresholds requiring them to be in a constant state of consultation.
• Stakeholders may wish to engage in the consultation before 21 May 2026 to ensure their views are considered.
• Once the new threshold is in force, it will particularly affect employers which operate across more than one location. These employers should implement centralised tracking of redundancy proposals to monitor whether the new threshold is met.
• The government intends to produce a Code of Practice on collective redundancy obligations.

Separate to the consultation, a reminder that the protective award for failure to collectively consult will double in April 2026 – increasing from 90 days' pay to 180 days' pay per affected employee. For more detail on the other changes to collective consultation under the Act, see our article Collective redundancies under the Employment Rights Bill.

Trade union reform: consultation on protection from detriment for industrial action

The ERA 2025 introduces new protection for workers taking part in lawful industrial action. It creates a new s236A of the Trade Union and Labour Relations Act 1992 (TULRCA), which protects workers from detriment where the sole or main purpose is to prevent or deter them from taking part in protected industrial action, or to penalise the worker for doing so. This follows the Supreme Court's decision in Mercer, which held that the law does not adequately protect workers from taking part in lawful strike action.

The government is seeking views on what the prescribed detriments should be. The consultation ends on 23 April 2026. The government's intention is for the regulations to be in place by October 2026.

Proposed options

1. Prohibiting all detriments for taking industrial action (government's preferred option); or
2. Creating a list of prohibited detriments. The government has not proposed examples but is inviting views.

The government also proposes that claims for detriment under this new section should attract an uplift on compensation of up to 25% for failure to comply with the Acas Code of Practice on disciplinary and grievance procedures.

What is not changing?

Pay deductions for time spent on strike are not considered a detriment and will remain lawful.

Key takeaways for employers

Stakeholders should engage in the consultation before 23 April 2026 if they wish their views to be considered.

Further updates on trade union reform

The government has updated its Codes of Practice on picketing and industrial action ballots and notice to employers. These Codes provide practical guidance for employers, workers and trade unions, and have been updated to reflect legal provisions on picketing and industrial action made by the ERA 2025.

Proposed ban on unpaid internships

Currently, there is no legal definition of an internship. An intern may be an employee, worker or volunteer, depending on the arrangements in practice. If an intern meets the definition of an employee or worker, they must receive at least the National Minimum Wage (NMW) and other statutory protections, such as paid holiday and statutory sick pay.

The government previously signalled its intention to ban unpaid internships, except those linked to education/training. Following its call for evidence (July–October 2025), which also considered work trials and voluntary work/work shadowing, the government has published its response.

In short, the government is not introducing an outright ban on unpaid internships. Instead, it will:

• update its guidance to make it clearer when interns must be paid;
• use existing enforcement channels and the Fair Work Agency to crack down on unscrupulous employers; and
• bolster communications campaigns to help young people understand their rights.

No legislative change is planned in relation to work trials, voluntary work or work shadowing.

Key takeaways for employers

Ensure any intern who qualifies as a worker or employee receives the NMW and other relevant statutory rights. Worker status is complex, so seek legal advice if needed.

Gender pay gap and menopause action plans

The government has published guidance on gender pay gap and menopause action plans. These are voluntary for employers from April 2026 and will be compulsory from spring 2027 for employers with 250 or more employees. The guidance is in two parts: creating an action plan and lists of actions. We will publish more detail on the guidance and its implications for employers shortly.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026