The Employment Rights Bill (ERB) was published on 10 October 2024 and contains 28 individual employment reforms.  Key changes where consultations are expected in 2025 are:

Collective Redundancies

Currently, employers are under a duty to consult collectively where they are proposing 20 or more redundancies "at one establishment" within a period of 90 days or less.  The Bill will remove the words "at one establishment" which would be a significant change, especially for large-scale employers with multiple sites across the UK.

The Government has just consulted on increasing the maximum protective award that can be made by the employment tribunal for failure to comply with the obligations for collective consultation. It is considering two options: either increasing the maximum protective award from 90 days' pay to 180 days' pay or removing the cap altogether. We await the outcome of the consultation which closed on 2 December 2024.

We are also expecting a consultation to be published in 2025 on increasing the minimum collective consultation period when an employer is proposing to dismiss 100 or more employees from 45 days to 90 days.

Zero hours contracts

The ERB proposes that those 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 reference period.  If more hours become regular over time, subsequent reference review periods will provide workers with the opportunity to reflect this in their contracts.  Those who wish to remain on zero hours contracts will still be able to do so.  Measures will also be introduced to ensure workers get reasonable notice of changes in shifts or working time, with proportionate compensation for any shifts cancelled or curtailed at short notice.

The new rights for zero hours workers are complex.  Whilst the ERB sets out the overall structure and framework of the new rights, many of the precise details will need to be specified by future regulations.  In developing the regulations, the Government intends to consult fully on the measures for zero hours workers.  We expect those consultations later in 2025.

Unfair dismissal

The ERB proposes that protection from unfair dismissal will become a day one right removing the current two-year qualification period and that employers will operate a statutory probationary period (or "initial period of employment") during which there will be a "lighter touch process" for employers to follow to dismiss an employee who is not right for the job.  The Government intends the initial period of employment to last nine months.

We expect the government consultations on several aspects of implementation of unfair dismissal reforms to start in 2025, including on the length of the statutory probationary period, how the "lighter touch process" will operate, how it interacts with the ACAS Code of Practice on disciplinary and grievance procedures as well as the compensatory award regime for dismissals during that period. 

Draft Equality (Race and Disability) Bill: The Government announced that it will bring forward a draft Equality (Race and Disability) Bill in the King's Speech in July 2024.  Reforms to be included are:

• Extending pay gap reporting to ethnicity and disability for employers with 250+ staff.
• Extending equal pay rights to protect workers suffering discrimination on the basis of race or disability.
• Ensuring outsourcing of services can no longer be used by employers to avoid paying equal pay.
• Implementing a new regulatory and enforcement unit for equal pay with involvement from trade unions.

We expect there to be significant consultation on the draft Bill which will progress more slowly than the ERB, and the Government has said that consultation will begin "in due course", but that is likely to be in 2025.

Equality action plans and menopause support. The ERB allows for future regulations to be made requiring employers with 250+ employees to develop and publish equality action plans (no more than once a year) relating to gender equality, addressing the gender pay gap and dealing with supporting employees through the menopause.  An amendment to the ERB put forward by the Government in November 2024 will require employers to include an explanation in their equality action plans on how they support their employees with menstrual problems and disorders. The government will consult the EHRC on the content of the regulations before they are published.  A Regulatory Enforcement Unit will be set up to deal with enforcement.

From 20 January 2025, tribunals will 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.  The change will mean that in a successful claim for a protective award, where it appears to the employment tribunal that the employer has unreasonably failed to comply with a relevant Code of Practice, the tribunal may increase the employee’s award by up to 25% or reduce it by up to 25% where it is the employee who has unreasonably failed to comply with the relevant Code.

From 1 April 2025 the National Living Wage will rise from £11.44 to £12.21 per hour for all workers aged 21 and over representing a 6.7% increase.  It means that the minimum salary of a worker working 37.5 hours per week will be approximately £23,800.  The Government has also made it clear that it intends to close the gap between the 18–20-year-old rate and the main National Living Wage rate, to create a single rate applying to all adults other than apprentices. This is reflected in a 16.3% increase from April 2025, from £8.60 to £10.00 for that age band. See our recent article here.

Neonatal Care Leave and Pay

New legislation giving employees a statutory right to take neonatal care leave and receive neonatal care pay entitlement was expected to come into force in April 2025 under the previous Conservative Government.

Regulations will be needed to give parents up to 12 weeks of paid leave, in addition to other leave entitlements such as maternity and paternity leave, so that they can spend more time with their baby who is receiving neonatal care (having been born prematurely or sick) in a hospital or other agreed care setting. It will be a day one right for employees and will apply to parents of babies admitted to hospital up to the age of 28 days and who have a continuous stay in hospital of seven full days or more.

The current Labour Government has not yet confirmed a date for the new legislation to come into force, but HMRC has published a policy paper on the tax treatment of statutory Neonatal Care Pay which states that it is due to start in April 2025.  

Paternity Leave (Bereavement) Act 2024

The Act removes the usual 26-week minimum service requirement for paternity leave for a bereaved father or partner where the mother, or individual with whom the child is placed or expected to be placed for adoption, has died in the first year after birth or adoption. This will make it a 'day one' right.  Measures include ensuring leave entitlement if both mother and child die, allowing paternity leave even if shared parental leave was taken and introducing the possibility of KIT days during leave.  There are also plans to extend paternity leave to 52 weeks.

These new rights will only become effective after further regulations are made.  The previous government aimed to bring the reforms into force in April 2025 and while Labour had said before the election that it would also pass the necessary regulations, there is no indication yet of when or whether new regulations will come into force.  

Review of Parental Leave System

We are also expecting a review of the current parental leave system.  The Government had indicated that it would carry out the review in its first year in government which means we should expect it to take place by July 2025.

Most of the trade union reforms contained in the ERB are not expected to come into effect until 2026, but some measures are expected in 2025.  The repeal of the Strikes (Minimum Service Levels) Act 2023 brought in by the last government enabling the setting of minimum service levels for strikes in relevant services (e.g. health, transport, fire and rescue) will happen as soon as the ERB receives Royal Assent.  Also, repeal of parts of the Trade Union Act 2016 removing restrictions on bringing industrial action established by the last government will take effect two months after the ERB receives Royal Assent.  

In its pre-election Plan to Make Work Pay, the Government proposed to introduce a "right to switch off".  This was not included in the ERB and instead the Government proposes to take it forward by introducing a statutory Code of Practice.   It has previously commented that a new code of practice would not create its own compensation claim but could mean that workers who are repeatedly contacted outside normal working hours may be able to claim uplifted compensation when bringing certain claims.  The Government has stated it intends that policies are developed specific to each workplace through agreement between a business and its workforce.  We expect a consultation on the new code of practice to be published in 2025.

In November 2024, the Government published an amendment to the ERB to extend time limits for bringing employment tribunal claims from three months to six months.  It is expected that the amendment will be approved, but it is not yet clear when it will take effect.  This will have a significant impact on employers as it is likely to increase the number of claims being brought adding to the costs and administrative burdens of business.

We can expect some interesting developments in discrimination case law on the grounds of religion or belief in 2025.  We are awaiting the Court of Appeal judgment in Higgs v Farmor’s School concerning protected beliefs in the workplace.  The case is expected to set a precedent for future cases concerning the conflict between an employee's right to express protected beliefs and the fundamental rights of other protected groups in the workplace. The courts will also be looking at what constitutes protected beliefs in a number of cases expected to be heard this year.