As 2024 comes to an end, we reflect on the year's developments and turn our attention to the significant employment law changes that await UK employers in 2025 and beyond.

Reflecting on 2024

2024 was indeed the busy year we had predicted it would be! To name a few, 2024 delivered the following:

• We started the year with new codified rights in respect of holiday pay and equalities (and later in July amendments in respect of TUPE) as a result of changes to how assimilated EU laws operate (see our earlier article here).
• During spring we saw new rights come into force, including unpaid carer’s leave (here), changes to paternity leave (here), extensions to the protection from redundancy for pregnant employees and employees on maternity, adoption or shared parental leave (here) and changes to flexible working (here).
• In the summer, stricter rules came in via a Code of Practice in respect of the practice of fire and rehire (here).
• Autumn saw new rules regarding the allocation of tips (here) and the new duty to prevent sexual harassment (here) come into force.

And of course, we cannot ignore the main development this year – the general election which took place in July and saw the election of a new Labour Government. During its election campaign, the new Government promised a huge package of employment reforms in its Plan to Make Work Pay and is now full steam ahead with bringing these to fruition, beginning with the introduction of the Employment Rights Bill into Parliament back in October 2024, which we discuss in more detail below.

Looking ahead to 2025

Below, we set out below the key legislative changes anticipated for 2025, from which it is clear that 2025 and 2026 are set to be the busiest years for employment law in a generation.

Legislative changes

Legislative changes currently anticipated to come into force next year include:

• January 20, 2025: From this date, employment tribunals will have the power to increase or reduce any protective award they make for non-compliance with collective consultation requirements by up to 25% for any unreasonable failure to comply with a relevant Code of Practice, including the Code of Practice on Dismissal and Re-engagement (see here for further information on developments in respect of ‘fire and rehire’ practices).

• April 2025?: Under the previous Government, The Neonatal Care (Leave and Pay) Act 2023 was passed and is set to introduce a new type of statutory leave (and, subject to qualifying criteria, pay) for employees who have a parental or other personal relationship with a child who is receiving or has received neonatal care (i.e., medical or palliative care after birth). Much of the detail of this right is still to be set out in regulations and a commencement date is not yet known. It had been anticipated that this would be brought into force in April 2025 and recent HMRC publications indicate that this is still the new Government’s intention, but this is yet to be confirmed.

• September 1, 2025: Although not directly employment related, the Economic Crime and Corporate Transparency Act 2023 contains a new corporate criminal offence of ‘failure to prevent fraud’ that may impact employment-related policies (such as whistleblowing or disciplinary policies). The new offence applies only to large companies, not-for-profit organisations and incorporated public bodies that meet two out of three of the following criteria: more than 250 employees; more than £36 million turnover; and more than £18 million in total assets. Large organisations may be liable where an employee, agent, subsidiary, or other ‘associated person,’ commits a fraud intending to benefit the organisation. Organisations can have a defence to this new criminal offence if they have reasonable fraud prevention procedures in place. The Home Office recently published guidance on how to comply with this new duty.

• Date not yet known: Section 17 of the Victims and Prisoners Act 2024 (here) will make any contractual provision void if it seeks to prevent the disclosure of information concerning criminal conduct by a “victim,” or a person who reasonably believes they are a victim, to certain categories of persons. This will affect provisions in settlement agreements or other agreements containing non-disclosure obligations. No date has been given for when this will come into force, but businesses should be aware of the Act and ensure that any non-disclosure provisions or agreements are compliant.

• Date not yet known: The Paternity Leave (Bereavement) Act 2024 will, among other things, remove the usual 26-week minimum service requirement for fathers and partners to take paternity leave where the mother of a child (or the adoptive parent/intended parent in a surrogacy arrangement) dies shortly after the child’s birth. Regulations are required to bring the Act into force and the date for implementation is not yet known.

• Date not yet known: The Pensions (Extension of Automatic Enrolment) Act 2023 lays the groundwork for future changes to the pension’s automatic enrolment framework. It paves the way for extending the automatic enrolment regime by reducing the minimum age for eligibility and reducing or removing the lower end of the qualifying earnings band so that pension savings are calculated from the first pound earned. The date of implementation is not yet known as it will be subject to consultation on the approach to implementation and timing.

Pay and tax changes

National Minimum Wage rates will increase from April 1, 2025 as follows:

• National Living Wage (21 and older) from £11.44 to £12.21 an hour.
• National Minimum Wage for people aged 18 to 20 from £8.60 to £10.00 an hour.
• National Minimum Wages for those under 18 and apprentices from £6.40 to £7.55 per hour.
• Daily accommodation offset from £9.99 to £10.66.

Statutory payments are anticipated to increase from April 2025 as follows:

• Statutory sick pay from £116.75 to £118.75 per week.
• Statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay from £184.03 to £187.18 per week.
• The lower earnings limit (the weekly earnings threshold for qualifying for all the above payments, except maternity allowance) will be £125 (up from £123). For maternity allowance, the threshold will remain at £30 a week.

Other rates and limits, for example in respect of the statutory cap on a week’s pay used for calculating the basic award for unfair dismissal and statutory redundancy pay, are due to be announced in early 2025.

The Government announced several updates to tax and National Insurance Contributions (NICs) as part of its Autumn Budget 2024 (see our Policy Hub and here). Several changes are due from April 6, 2025, including:

• The rate of employer NICs will increase by 1.2 percentage points, from 13.8% to 15%.
• The Secondary Threshold (the per-employee threshold at which employers become liable to pay NICs on each employee’s salary) will reduce from £9,100 per year to £5,000 per year until April 6, 2028 and then will increase by CPI thereafter.
• The Employment Allowance will increase from £5,000 to £10,500 a year and be extended to all eligible employers by removing the £100,000 threshold for eligibility.

Government reforms – the Employment Rights Bill and beyond

Of course, the most significant employment law developments coming down the track in 2025/26 are those that have been promised by the new Labour Government as part of its Plan to Make Work Pay. There isn’t space here to describe all the reforms (we will leave this to our Policy Hub). However, what is clear is that taken as a whole, this is the most significant package of employment law reforms that we have seen in recent decades. The reforms will lead to fundamental changes in key HR processes (such as recruitment and dismissal), a sea change in employee relations (including paving the way for a new era of partnership with unions) and an increased focus on employment law compliance and enforcement, increasing the burdens on businesses whilst simultaneously enhancing workers’ rights.

The Government is planning to deliver its Plan to Make Work Pay over several phases in the coming year and beyond:

• The Employment Rights Bill is working its way through Parliament, with amendments being proposed along the way. It has been described by the Government as phase one of delivering its plans for reform and is expected to pass into law before mid-2025. This does not mean that implementation for all reforms would be immediate, as further consultation and regulations are required on the detail of many of the reforms (see the Timings page on our Policy Hub). Employers should therefore expect to see targeted consultations on the detail of the reforms and regulations being drip-fed from January 2025 onwards into early 2026. In addition, further guidance and codes of practice will likely follow, setting out the practical steps for employers. The Government anticipates that most reforms in the Employment Rights Bill will take effect no earlier than 2026, with reforms to unfair dismissal no sooner than Autumn 2026. Although, some provisions are due to come into force as soon as the Employment Rights Bill is passed and some two months after.

• Non-legislative reforms are being delivered alongside the Employment Rights Bill via existing powers and non-legislative routes such as a code of practice on the right to switch off. The details and implementation dates are unknown, but we could see non-legislative changes coming in during 2025.

• Equality (Race and Disability) Bill promises additional reforms to pay gap reporting and equal pay and is due to be published in draft in the 2024/25 Parliamentary Session.

• Longer-term reforms are also promised as part of the Plan to Make Work Pay, but the Government recognises that these will take longer to undertake and implement. For these reforms (such as in respect of worker status and parental leave), we may see calls for evidence or other reviews being commenced during 2025, but implementation will likely be much later.

Separately, the Data (Use and Access) Bill was introduced into Parliament on October 23, 2024, and is the latest in a line of efforts to re-look at data protection laws in the UK following Brexit. The accompanying Explanatory Notes state that this bill includes targeted reforms to try to “maintain high standards of protection, whilst facilitating the safe deployment and development of modern technologies, and the responsible use of personal data.” This bill is making its way through Parliament and could pass before the close of this Parliamentary session in the summer of 2025.

In conclusion...

Employers should get ready for a busy 2025! Employers will need to keep up with the wave of legislative reforms in the Employment Rights Bill, Data (Use and Access) Bill and, once introduced in draft, the Equality (Race and Disability) Bill and beyond. In particular, employers should keep an eye out for implementation dates as they become clearer and any additional guidance or codes of practice published in due course.

We will of course be tracking the reforms via our Policy Hub and any key employment law updates via our monthly newsletter.

If you have any questions about how to stay on top of these changes or have any questions regarding any of the developments in this article, please contact your usual GQ|Littler contact.