The publication of the Employment Rights Bill ("ER Bill") and the expectation that it will become law, most likely in the second half of 2025, means that significant change is on the way. 2025 is though likely to be dominated by multiple consultations rather than substantive change.
Consultations
The Government has confirmed that there will be extensive consultation over the proposed employment law changes set out in the ER Bill. It has also confirmed that most of the proposed changes will not be implemented until 2026 at the earliest.
We've already seen several consultations in the final quarter of 2024 relating to the ER Bill, but throughout 2025, we are expecting to see consultations on issues such as: -
- The removal of the qualifying service requirement for unfair dismissal including consultation on the length of the initial period of employment where a "lighter touch" dismissal procedure will be required, and how that procedure will work; and
- Doubling the minimum collective consultation period from 45 to 90 days where an employer is proposing to dismiss 100 or more employees within a 90-day period.
Other consultations expected in 2025 include those seeking views on developing the detail of the approach to be taken on flexible working, and views arising from the introduction of the right to reasonable notice of shifts, and payment for cancelled, curtailed, or moved shifts.
We may also see consultations relating to matters such as: -
- A more general right to bereavement leave; and
- Equality action plans and menopause support.
The Government also stated in their Plan to Make Work Pay document that they would conduct a review of the current parental leave system during their first year of Government.
Legislation
In addition to the repeal of the Strikes (Minimum Service Levels) Act 2023 on the day the ER Bill receives Royal Assent (i.e., anytime from this summer onwards), a number of other trade union related provisions will come into force two months later. These are largely facilitated by the repeal of the majority of the Trade Union Act 2016 and include changes to rules on supervision of picketing, blacklisting, and turnout and support thresholds for industrial action ballots.
Away from the ER Bill there are other pieces of legislation expected to take effect this year. Later this month, on 20 January, an amendment to the Trade Union and Labour Relations (Consolidation) Act 1992 will enable employment tribunals to increase or decrease compensation by 25% in claims for a protective award where it appears a party has not complied with the Code of Practice on Dismissal and Re-engagement.
Although it has yet to be confirmed, April is also expected to see the right to neonatal leave and pay coming into force. This will introduce statutory neonatal leave and, where qualification requirements are met, pay for up to twelve weeks for parents of babies that require neonatal care.
Changes to statutory rates and employment tribunal limits
April will also see the annual increase to national living and national minimum wage. For workers aged 21 and over (i.e., the National Living Wage), the rate will increase from £11.44 per hour to £12.21 per hour.
Also in April, we will see changes to statutory sick pay and statutory benefits as well as changes to employment tribunal compensation including the annual increases to basic and compensatory awards and injury to feelings awards.
April will also see the changes to employer national insurance rates announced in the autumn budget.
Gender pay gap reporting
Around the time that these changes are taking effect, the usual gender pay gap reporting deadlines need to be met by those organisations with a headcount of 250 or more employees. Accordingly, the deadline for public sector employers to report their data will be 30 March 2025, with a snapshot date of 31 March 2024. For private sector employers and voluntary organisations, the deadline will be the 4 April 2025, with a snapshot date of 5 April 2024.
Other changes
New employment tribunal rules come into force on 6 January. The changes to the rules are largely a tidying up exercise. This is due to be followed later in January by a Practice Direction that will result in employers no longer being able to lodge their response to a claim (ET3 forms) by email, although a period of grace will be given for around five weeks after the Practice Direction comes into force. Thereafter any response to a tribunal claim will only be able to be lodged using the tribunal service online system, by post or by hand.
Further employment law changes may yet be announced, for example, we may see progress in relation to the Draft Equality (Race and Disability) Bill, which was announced in the King's Speech, most likely, by way of some form of consultation. This is intended to enshrine the full right to equal pay in law for ethnic minorities and disabled people. It will also introduce mandatory ethnicity and disability pay reporting for employers with 250 or more employees.
For further details of what to expect in 2025 please see our Employment law reform timeline.
