Employment Law Changes 2025

• Unfair Dismissal: The ERB proposes that protection from unfair dismissal will become a day one right, removing the current 2-year qualification period. Employers will also operate a statutory probationary period during which there will be a “light touch process” for employers to follow in order to dismiss an employee that is not right for the role.
• Zero Hours Contracts: Employees on zero hours or low hours contracts, who regularly work more than these hours, will have the right to a guaranteed hours contract which reflects the hours they regularly work over a 12-week period. Those who wish to remain on zero hours contracts can continue to do so. Measures will also be introduced to ensure workers receive notice of changes in shifts or working time, with proportionate compensation for any shifts cancelled or curtailed at short notice.
• Collective Redundancies: The Government have announced that collective consultation will now be required if there are 20 or more redundancies at “one establishment” or a “different threshold” within a period of 90 days. More information on the threshold details are to be set out in further regulations. 
• Fire and Re-hire: The changes to the “fire and re-hire” practice makes it more difficult for employers to dismiss and re-engage employees under new, and sometimes less favourable, terms. As of 20 January 2025, tribunals now have the power to increase or reduce compensation by up to 25% for failure to comply with collective consultation requirements under the Code of Practice on Dismissal and Re-engagement (or another relevant Code of Practice). 
• Harassment: The new duty on employers to take ‘reasonable steps’ to prevent sexual harassment of their workers under the Worker Protection (Amendment of Equality Act 2010) Act 2023 came into effect in October 2024, however the ERB will also introduce liability for third party harassment on employers in respect of all types of harassment. 
• Industrial Relations: Significant changes will be made including repealing the Minimum Service Levels introduced by the previous Government. This will simplify trade union recognition and enhance protection for those taking industrial action.  
• Bereavement Leave: Updates to bereavement leave rights are expected over the next 2 years, with some changes possibly starting in April 2025. Whilst dates remain uncertain, ongoing employment law consultations suggest these changes are coming and will chance grievance procedures. 
• Flexible Working: Under the new Bill, employees will gain an automatic right to flexible working from their first day of employment. Currently, employees can request flexible working arrangements a few times a year, but the new law will make this standard unless the employer can prove a request is unreasonable. 

• National Minimum Wage: From 1 April 2025, the National Living Wage for over 21s will increase to £12.21 per hour, and the National Minimum Wage for 18-20-year-olds will rise to £10 per hour.
• National Insurance Contributions: Adjustments to National Insurance Contributions are expected to align with the wage increases, ensuring that both employers and employees are contributing fairly. The National Insurance (NI) rate paid by employers will rise by 1.2%, from 13.8% to 15% by April 2025. In addition, the threshold at which employers start paying NI on worker’s earnings will be reduced from £9,100 a year to £5,000. 
• Statutory Rates: From 6 April 2025, Statutory Sick Pay will increase from £116.75 to £118.75 per week, and from 7 April 2025, other statutory rates, including maternity, paternity, adoption, and shared parental leave, will also see increases from £184.03 to £187.18 per week. 
• Holiday and Holiday Pay: For leave years that started on or after 1 April 2024, employers now have a choice as to how they calculate holiday pay for part-year or irregular hours workers. They can either use rolled-up holiday pay, paying an extra 12.07% on top of earnings in the pay period they are paying the worker for, or they can pay the worker the average of their pay over a p 52 week period when they take holiday. Employers should review their contracts and payroll practices to implement this change effectively. As many businesses will have a January to December leave year, this means for some, these rules will only now be coming into effect. 
• Overtime Pay Regulations: Changes in overtime pay regulations, including potential increases in the minimum salary thresholds for executive, administrative, and professional employees, are on the horizon.

• Neonatal Care: The new right to neonatal care leave allows employees to take time off when their baby is in hospital receiving neonatal care. This provision is a progressive step towards supporting working parents and ensures they can be with their child during critical times. Employers should update their leave policies and communicate these changes to their employees to ensure they are aware of their rights.
• Paternity Bereavement Leave: This new right provides crucial support for fathers or non-birthing partners in the unfortunate event of the death of a mother or a person with whom a child is placed for adoption. This change underscores the importance of mental health and family support in the workplace.
• Enhanced Protection against Dismissal for Pregnant Workers and New Mothers: The new Bill plans to strengthen the current protections for pregnant women and returning new mothers. In April 2024, the protections for parents facing redundancy were extended. This will apply to other forms of family leave, such as adoption leave, shared parental leave, neonatal care leave and bereaved partners’ paternity leave.

As announced in the King’s Speech in July 2024, plans are in place to introduce a draft Equity (Race and Disability) Bill which will set out the right to equal pay for ethnic minorities and disabled people. It will also require employers with over 250 or more employees to report on ethnicity and disability pay gaps. Reforms include extending pay gap reporting, extending equal pay rights, ensuring outsourcing of services can no longer be used by employers to avoid paying equal pay, and implementing a new regulatory and enforcement unit for equal pay with involvement from trade unions. 

At the same time as the 2025 employment law rate changes are taking effect, the usual Gender Pay Gap Reporting deadlines need to be met by businesses with 250 or more employees. The deadline for the public sector employers to report their data will be 30 March 2025 and for private sector employers and voluntary organisations, the deadline will be 4 April 2025. 

We can expect some interesting developments in 2025. To keep updated with Employment Law Cases, please sign up to our Newsletters. You can view our monthly Employment Law Case Updates here.