What’s on the horizon for employment law in 2025?
The Government’s flagship Employment Rights Bill (ERB), currently making its way through parliament will see the introduction of significant changes to UK employment law over the next few years.
We highlight key legislative changes for employers to be aware of in 2025, while also looking ahead to proposals which could come into effect during 2026.
Statutory payment increases: from April 2025
April will see changes to the main statutory payments as follows:
- The national living wage (for those aged 21 and over) will increase to £12.21 per hour from 1 April 2025.
- Statutory sick pay will increase to £118.75 per week from 6 April 2025.
- Statutory maternity, paternity, adoption, shared parental and parental bereavement all increase to £187.18 per week from 6 April 2025. Neonatal care pay will be paid at the same rate.
Neonatal leave and pay: from 6 April 2025
The Neonatal Care (Leave and Pay) Act 2023 will come into force on 6 April 2025 and is expected to benefit around 60,000 new parents.
- This new type of leave, which will be a “day one” right, will be available to parents of babies admitted to neonatal care who are under 28 days old and have been in hospital for a continuous stay of 7 days or more.
- Eligible parents will be permitted to take up to 12 weeks of leave in addition to any other type of entitled family leave, such as maternity, adoption and paternity leave.
- In addition to neonatal leave, neonatal care pay (£187.18 per week) will be paid for up to 12 weeks to those parents who have at least 26 weeks’ continuous service.
Employment Rights Bill: expected 2025 / 2026
The Employment Rights Bill (ERB) is currently making its way through Parliament with several consultations underway or planned for 2025, ahead of the most significant reforms coming into force during 2026.
Key proposed reforms include:
- Granting unfair dismissal and parental leave rights from day one of employment.
- Restrictions on ‘fire and re-hire’.
- Improved collective bargaining rights for trade unions.
- Making flexible working a default option in employment.
- Extending the time limit to bring employment tribunal claims from 3 to 6 months from the date of dismissal/alleged unlawful act.
Most recently, the ERB has been amended to include the following:
- The extremely complex rights for low and zero hours workers will be extended to agency workers.
- Statutory sick pay (SSP) will be extended so that those workers earning less than £123 per week will receive 80% of their weekly pay or the standard SSP rate (increases to £118.75 per week from 6 April 2025), whichever is less.
- The ability for the Government to introduce a higher threshold for collective consultation for multi-site redundancies (the current threshold is 20).
- The maximum award for failure to consult on collective redundancies will increase from 90 to 180 days per employee.
Notably, proposals for interim relief to be available in collective redundancy and fire and re-hire cases have been dropped.
Equality (Race and Disability) Bill: expected 2025 / 2026
At present, equal pay claims are restricted to differences in pay based on sex only. However, this draft bill proposes to extend the following:
- Gender pay gap reporting for large employers (with more than 250 employees) to ethnicity and disability too; and
- Equal pay rights to protect workers suffering discrimination on the basis of race or disability.
This bill will be subject to a consultation period so it could be some time before it is enacted into law.
Our Employment team advises both employers and employees on all aspects of employment law, providing support and guidance on the full range of employment issues which arise during the employment life cycle, from recruitment through to redundancies, performance dismissals and executive exits. We can advise how best on how to prepare for the upcoming changes to UK employment law along with any other employment law needs. Please contact Penny Hunt, Head of our Employment practice, to see how we can help you.