What’s New for 2025?

What’s New for 2025?

Consultations on Employment Rights Bill

The Employment Rights Bill includes 28 separate reforms and marks the first in a series of phases of the government’s delivery of its Plan to Make Work Pay.

The legislation removes the two-year qualifying period for protection from unfair dismissal, as well as introducing day-one rights to paternity leave, parental leave and bereavement leave.

The measures also include the removal of the lower earnings limit and three day waiting period for statutory sick pay, and the introduction of flexible working as a ‘default’ right from day one for all workers, unless an employer can prove it is unreasonable.

Additionally, the bill aims to “end one-sided flexibility” by giving workers the right to be offered a contract with guaranteed working hours if they work regular hours over a defined period, which was previously proposed to be 12 weeks.

‘Fire and rehire’ practices will also be banned, in all but exceptional circumstances following the P&O scandal.

Whilst the majority of these reforms are not likely to take effect until 2026, with the government specifying that reforms of unfair dismissal will take effect no sooner than Autumn 2026, consultations on the measures will begin this year. 

Preparation will be crucial given the scope and extent of the changes coming into force. This should include reviewing policies as soon as the specific details of each reform is announced, identifying training requirements for managers, especially regarding performance management given the proposed changes to unfair dismissal rights, and assessing recruitment strategies.

Draft Equality (Race and Disability) Bill

The draft bill, once enacted, will solidify the full right to equal pay for disabled individuals and ethnic minorities. The new legislation aims to simplify the process of filing equal pay by offering claimants greater legal clarity.

For organisations with over 250 employees, the bill will mandate ethnicity and disability pay gap reporting, building on the success of gender pay in highlighting wage disparities faced by women.

Currently, equal pay laws through three distinct equality clauses: one for sex equality, one for maternity equality, and one for pensions equality. It is expected that the draft bill will follow a similar structure, introducing separate clauses for ethnicity and disability.

For instance, the sex equality clause allows a woman (or man) to benefit from more favourable terms given to the opposite sex for performing the same role with equal work. Exceptions apply if the disparity is based on a non-discriminatory material factor.

This framework will make it easier and simpler for employees to challenge pay inequalities when they suspect unfair treatment.

Statutory Code of Practice for Right to Switch Off

A measure which formed part of the government’s Plan to Make Work Pay with the aim to ensure remote work does not turn homes into “24/7 offices”, however, the ‘right to switch off’ was conspicuously absent from the Employment Rights Bill.

Instead, the Government plans to introduce the policy through a statutory code of practice, which will prevent employees from being contacted outside of working hours, except in exceptional circumstances.

The government’s Next Steps to Make Work Pay document does not specify when the code of practice will come into force stating only that “delivery of these types of commitments will take place alongside the Employment Rights Bill’s passage and beyond Royal Assent”.

Neonatal Care (Leave and Pay) Act 2023 

The Neonatal Care (Leave and Pay) Act 2023 is expected to come into effect in April 2025, and will give parents up to 12 weeks of paid leave if they have babies who are admitted into hospital. The baby must be admitted up to the age of 28 days and have a continuous stay of 7 days or more. The act will have a minimum entitlement of one week, and will be in addition to other maternity, paternity, and shared parental leave entitlements. 

In order to qualify, an employee must be employed for a minimum of 26 weeks prior to the leave being requested and be earning an average of at least £123 a week. This mirrors the entitlement to maternity pay. The leave must also be taken in the first 68 weeks of the baby’s birth. 

National Minimum Wage

The national minimum wage increase will come into force on 1 April 2025. The national living wage will increase by £0.77 to £12.21. For 18-20 year olds, minimum wage will increase by £1.40 to £10.00 an hour, and for 16-17 year olds it will increase by £1.15 to £7.55 an hour. 

Statutory Payments

From April 2025 several statutory payments rates in the UK will increase. 

The statutory sick pay (SSP) will rise from £116.75 to £118.75 per week, with a qualifying threshold of £125 per week. Under the proposed Employment Rights Bill, sick pay could soon be payable from the first day of being ill, however this is unlikely to be in effect by April. 

The statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay will rise from £184.03 to £187.18 per week. 

In addition, the lower earnings limit (the weekly earnings threshold for qualifying for all the above payments, except maternity allowance) will increase to £125 (up from £123), while the threshold for maternity allowance will remain at £30 per week.