2025 is set to be a pivotal year for employment law, following the introduction of the Employment Rights Bill in October 2024. Although the Government has indicated that most of the changes proposed under the Bill won’t come into effect until 2026, the Bill is expected to receive Royal Assent this year and consultations on many of the proposals will begin in 2025. Employers should therefore keep up to date with how the proposals develop this year, and use this time to prepare for the changes ahead of 2026.
Read on for an overview of some of the key employments law changes expected in 2025.
Employment Tribunal Reforms
New Employment Tribunal Procedure Rules came into effect on 6 January 2025. These are not significantly different to the previous rules, but employers should refer to the new rules moving forward, particularly when corresponding with the Employment Tribunal.
A new Practice Direction on filing claims and responses with the Employment Tribunal is also expected to be published in January 2025. Once this takes effect, employers must submit the response Form ET3 online, by post or by hand and can no longer submit this by e-mail (save for in exceptional circumstances).
Increases to National Minimum Wage
New National Minimum Wage rates are set to take effect from 1 April 2025, which take account of the ongoing cost of living crisis and inflation trends projected up to March 2026.
The National Living Wage will rise from £11.44 to £12.21 per hour, continuing to apply to workers aged 21 and over. There will also be a record increase in the rate for workers aged 18-20, from £8.60 to £10.00 per hour.
In full, the new rates are as follows:
Increases to Statutory Sick Pay and Other Benefits
From 6 April 2025, statutory sick pay will increase from £116.75 to £118.75 per week.
From 7 April 2025, the prescribed statutory rates of maternity, paternity, adoption, shared-parental and parental bereavement pay will increase from £184.03 to £187.18 per week. The lower earnings limit (the earnings threshold required to qualifying for these payments) will also increase from £123 per week to £125 per week.
The Neonatal Care (Leave and Pay) Act 2023
The Neonatal Care (Leave and Pay) Act 2023 received Royal Assent in May 2023 and is expected to take effect in April 2025. The Act will introduce a new type of statutory leave and pay for parents whose babies need neonatal care.
Entitlement to neonatal care leave will be a “day one” right for employees whose babies are admitted into hospital for medical or palliative care of at least seven consecutive days, within the first 28 days of birth. The length of the leave will depend on how long the baby spends in hospital, but will range from at least one week up to a maximum of 12 weeks, in addition to existing parental leave entitlements. The leave can be taken at any time within the first 68 weeks following the baby’s birth.
However, in order to qualify for statutory neonatal care pay, employees must have at least 26 weeks of continuous service and earn the lower earnings limit. It is expected that pay will be in line with the statutory prescribed rate for other types of family-related leave (as set out above).
The Paternity Leave (Bereavement) Act 2024
The Paternity Leave (Bereavement) Act 2024 received Royal Assent in May 2024 and is expected to take effect in 2025, although no specific date has yet been confirmed.
The Act will remove the usual 26-week minimum service requirement for fathers and partners to take paternity leave where the mother of the child (or the adoptive parent or intended parent in a surrogacy arrangement) dies shortly after the child’s birth. This will make paternity leave a “day one” right for bereaved partners.
Draft Equality (Race and Disability) Bill
As announced in the King’s Speech in July 2024, the Government plans to introduce a draft Equality (Race and Disability) Bill, which will set out the right to equal pay for ethnic minorities and disabled people, making it easier for them to bring pay discrimination claims. It will also require employers with 250 or more employees to report on ethnicity and disability pay gaps.
It is expected that the draft Bill will be published in 2025, and that it will be subject to significant consultation and therefore progress more slowly than the Employment Rights Bill.
Right to Disconnect
The Government’s “Plan to Make Work Pay” mentioned introducing a new “right to switch off”, giving employees the right to disconnect from work outside of working hours and not be contacted by their employer (save for in exceptional circumstances).
This right was not included within the Employment Rights Bill, and instead the Government confirmed that it would be introduced through a new Statutory Code of Practice. It is unclear when the new Code will come into force, but it is expected that a consultation on the new Code will be issued in 2025.
Finally, the Employment Rights Bill proposes to make wide-ranging changes to employment rights through no less than 28 individual employment reforms. This includes:
For a detailed summary of the proposed changes, please see our previous article here.
Although most of the changes proposed under the Bill won’t come into effect until 2026, the Government carried out four consultations from October to December 2024 (in respect of: zero hour contracts; collective redundancy consultation and “fire and rehire” practices; trade union legislation; and statutory sick pay) and further consultations on the other proposed changes will take place in 2025.
No specific dates have yet been confirmed, but employers should “keep an eye out” for these consultations and submit their views when possible.
Employers should prepare for the changes which are coming into force in 2025, and use this year as an opportunity to start planning for the raft of changes coming in 2026. You should keep track of how the proposals under the Employment Rights Bill unfold, and start reviewing and updating your policies, procedures, practices and contracts of employment. Taking proactive steps early on will ensure a smoother transition when the proposals do eventually become law.
If you have any questions regarding the above changes and proposals, please contact a member of the Employment team here.
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