Redundancy - What Changes When You Hit 20 Employees?

When a business faces a downturn or restructuring, letting staff go is always a difficult and legally sensitive task. However, in UK employment law, the entire procedural landscape changes based on one specific number: 20.

Whether a business makes 19 people redundant or 20 people redundant dictates two entirely different legal frameworks. Crossing that threshold shifts an employer from a standard individual process to a highly regulated collective procedure.

Here is a breakdown of the critical differences between a redundancy process for fewer than 20 people versus 20 or more people.

The Summary: Small Scale vs. Mass Scale

1. Who You Must Consult

• Fewer than 20 people: The process is entirely individual. The employer meets directly with each affected employee. There is no legal requirement to involve trade unions or elect staff representatives.

• 20 or more people: The process must be collective. Before speaking to individuals about their specific roles, the employer must consult with recognized trade unions or legally elected employee representatives. They must discuss the broader business case, ways to avoid redundancies, and how to mitigate the impact.

2. The Legal Timelines

• Fewer than 20 people: There is no fixed statutory minimum timeframe. The law simply states that consultation must be "fair and reasonable." For a small number of redundancies, this process often takes between 1 to 2 weeks.

• 20 or more people: The law imposes strict minimum waiting periods before any dismissal notices can be handed out. If you are making 20 to 99 people redundant within a 90-day window, consultation must start at least 30 days before the first dismissal takes effect. (Note: This rises to 45 days if making 100 or more redundancies).

3. Government Notification (The HR1 Form)

• Fewer than 20 people: The government does not need to be formally notified of the restructuring.

• 20 or more people: Employers are legally required to notify the Secretary of State by submitting an HR1 Form [Acas Failure to Consult Guide]. Failing to submit this form before starting the process is a criminal offence, which can result in an unlimited fine for the company and its directors.

4. The Cost of Getting It Wrong

The financial penalties for skipping or rushing the process look completely different on either side of the 20-employee line.

• Fewer than 20 people: If an employer fails to consult properly, an employee with over two years of service can sue for Unfair Dismissal. Tribunals award compensation based on actual financial loss suffered by the individual.

• 20 or more people: If collective consultation is skipped, employees can claim a Protective Award. Under the Employment Rights Act 2025, this penalty is up to 180 days’ uncapped actual pay per employee. This applies to all affected staff from day one of their employment, regardless of their length of service.

The Crucial "Single Establishment" Trap

Employers cannot bypass the 20-person rule by splitting redundancies across different teams or locations. The 20-person threshold applies to redundancies happening within a 90-day window at a "single establishment".

If a business has multiple branches, courts look at whether each branch operates independently. If they do, the numbers are counted per branch. If they are managed centrally, all redundancies across the company are pooled together—potentially pushing a business over the 20-person line without them realizing it.

If you are currently planning or facing a redundancy process use Redundly to guide you through what can be a daunting complicated process. Redundly takes your inputs and knows the number of employees at risk, the 90 day window and steers you on the right path including generating the Section 188 letter to the employee representatives.

Redundly generates a complete, legally structured UK redundancy process pack in 15 minutes. From £199 at redundly.co.uk.