In June 2025, an employment tribunal handed down a costly lesson to Wilko, the household retail name whose 2023 collapse resulted in thousands of redundancies. The tribunal found Wilko had breached its collective consultation duties, exposing the company to protective awards topping £2 million.
While £2 million might feel significant on paper, the Employment Rights Bill is poised to make that figure look modest. Under the Bill, protective awards could double, and collective consultation triggers could widen dramatically. Compliance and HR teams need to treat this as a warning sign: collective consultation is about to become even more critical, and the price of getting it wrong is rising fast.
What went wrong at Wilko?
After entering administration, Wilko embarked on a rapid and significant redundancy process affecting around 10,000 employees. Although some steps were taken to consult employee representatives, the tribunal found these fell far short of what the law demands.
The GMB union successfully argued Wilko’s approach did not satisfy the minimum legal requirements for collective consultation under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Despite acknowledging Wilko’s financial difficulties, the tribunal was clear: even a failing business cannot sidestep its obligations to properly inform and consult its workforce.
Protective awards were granted to thousands of workers. Four days’ pay for store employees and 13 days’ pay for staff in distribution and support centres. On an individual basis, these sums seem small, but across thousands of employees, the bill ballooned to over £2 million. This is the compliance sting in the tail: a seemingly minor failure to consult correctly becomes a catastrophic financial liability at scale.
Collective consultation: what does the law require?
At its simplest, collective consultation is about giving workers — through their representatives — a meaningful say before large-scale redundancies are confirmed. Under TULRCA, if an employer proposes to dismiss 20 or more employees at one establishment within 90 days, they must start consultation early and in good faith.
There are mandatory consultation periods depending on headcount:
- 30 days for 20–99 redundancies
- 45 days for 100 or more redundancies
But timing is only part of the picture. Consultation is about reaching agreement on ways to:
- avoid the dismissals if possible
- reduce the number of redundancies
- soften the impact on those affected
Meaningful consultation also depends on providing full, accurate information to employee reps. This is normally done through a detailed ‘s188 letter’ that should cover:
- why redundancies are being proposed
- how many employees and what roles are affected
- the pool of potentially redundant staff
- selection criteria and scoring processes
- timescales and procedures for dismissal
- redundancy pay arrangements
- details of any agency staff being used
Any consultation lacking this transparency is unlikely to meet legal standards. That was precisely Wilko’s failing: the tribunal found their efforts half-hearted, late, and incomplete.
The risk of non-compliance: a growing financial threat
At present, the protective award for breaching collective consultation rules can be up to 90 days’ gross pay per affected employee, with the amount uncapped. Wilko’s bill demonstrates how rapidly even a reduced protective award can snowball into millions.
But the Employment Rights Bill will raise the stakes much higher. It proposes:
- increasing the protective award maximum from 90 days to 180 days’ gross pay
- redefining the concept of “establishment” so that redundancies across several sites cannot simply be treated in isolation
Currently, employers can argue that redundancies at separate sites fall below the 20-person threshold, thus avoiding collective consultation. The Bill will introduce a new aggregated threshold across establishments, meaning larger businesses with multiple sites will lose this flexibility.
This is a critical compliance shift. Multi-site employers will need to track redundancies across their entire UK operation, rather than treating each branch as an island. That will demand sharper oversight, clearer data flows, and better joined-up consultation processes.
Compliance priorities: what needs to change?
Wilko’s £2 million payout is a stark reminder that even in administration, businesses cannot afford to shortcut collective consultation. Once the Employment Rights Bill takes effect, the compliance burden will only increase.
Practical steps for compliance leaders:
Audit redundancy processes — stress-test them against both current requirements and the new Employment Rights Bill proposals
Train HR and line managers — they must understand what meaningful consultation looks like, including the legal minimums around notice periods, s188 information, and employee representation
Strengthen internal reporting — develop systems to track redundancies across all sites so you know immediately if you hit a collective consultation threshold
Review template letters and procedures — make sure they are up-to-date, legally robust, and future-proofed for the Employment Rights Bill
Document decisions — if you ever need to rely on the “special circumstances” defence (which is rarely accepted), you must have a clear, evidenced rationale showing why proper consultation was impossible
Financial pressure is not a defence. Tribunals expect employers to consult as much as practicable, even in distress. In Wilko’s case, the failure to fully engage representatives was seen as avoidable and the awards were issued accordingly.
