Employment law in 2025 – what’s in store?

2024 was undoubtedly an eventful year for employment law and 2025 is expected to continue on a similar trajectory.

Most employers will now be aware of the Employment Rights Bill that was published in October 2024 as part of the Labour government’s plans to fundamentally reform employment laws and to improve workers’ rights.

Deputy Prime Minister Angela Rayner said: “This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy.”

The Bill is wide-ranging and proposes to bring forward 28 individual employment reforms including strengthening statutory sick pay provisions, ending ‘exploitative zero hours contracts’, removing the existing two-year qualifying period for unfair dismissal protection and establishing day one rights for paternity, parental and bereavement leave.

More extensive consultations on the Bill are expected to take place in 2025, with specific details to be fleshed out – watch this space.

It is expected that most of the proposed reforms will not come into force until 2026 at the earliest.

Employment Tribunal rules and new equality laws

On 6 January 2025, new Employment Tribunal Rules of Procedure will come into force, replacing the existing 2013 rules. Whilst there are no significant changes, a new Practice Direction will also follow.

This will make it compulsory for ET3 responses to claims to be presented either online, by post or in person, with email no longer being an option other than in exceptional circumstances.

Employers should take note as lodging a response incorrectly may mean that the response is not accepted, putting them at risk of receiving a default judgment and being unable to defend the claim.

Other promised changes in 2025 include the Equality (Race and Disability) Bill, due to be published in draft later this year. In the King’s Speech last July, it was stated that the government is committed to tackling pay discrimination at work, in light of evidence showing that ethnic minorities are paid less than their white counterparts and that people with disabilities are paid less than those without disabilities.

At the moment, equal pay legislation is only applicable where the pay disparity is attributed to sex. However, once the proposed legislation comes into force, this will be extended to those that are paid less because of their race or disability. Furthermore, large employers with 250 or more employees will be mandated to disclose reports on ethnicity and disability pay gaps.

Other changes expected in April

Other changes expected to come into force from April 2025 include:

• The Neonatal Care (Leave and Pay) Act 2023 – providing parents with a right of up to 12 weeks’ leave and pay where their baby requires neonatal care, in addition to existing parental leave entitlements
• The rate of employer NICs will increase from 13.8% to 15%
• The Employment Allowance will increase from £5,000 to £10,500 a year and be extended to all eligible employers
• National Living Wage for people aged 21 and older will increase from £11.44 to £12.21 an hour
• National Minimum Wage, for people aged 18 to 20, will increase from £8.60 to £10.00 an hour
• National Minimum Wage for those under 18 and apprentices will increase from £6.40 to £7.55 an hour
• Updates to statutory redundancy pay amounts
• Updates to ‘Vento bands’ i.e., compensation for ‘injury to feelings’ for successful discrimination claims at the Employment Tribunal (details yet to be confirmed).

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