What employment law changes are happening in 2025?

Following the shock and awe of the Labour Government’s proposed revisions to employment law in 2024, 2025 looks like it might be a quiet year.

Most of the raft of changes forecast in the Employment Rights Bill (the “Bill”) will not be implemented until 2026, and many of them may be watered down by then.

In this article, our employment partner Emma Clark, and associate Imogen Dale, consider what you can expect to see in employment law this year.

Fire and re-hire

The Bill aims to restrict employers from the contentious practice of fire and re-hire, where employees who do not agree to proposals to change their contractual terms are dismissed and then re-engaged under the updated terms in substantially the same roles.

The Bill provides that the dismissal of such an employee will be automatically unfair unless the employer can demonstrate that the business would be unable to continue financially without the changes, and as such the changes cannot be reasonably avoided.

Currently, there is only a Code of Practice on dismissal and re-engagement.

From 20 January 2025, the protective awards (of up to 90 days uncapped salary for each affected employee) that can be imposed by an Employment Tribunal against an employer if the employer has unreasonably complied with the Code, can now be increased by up to 25%.

Neonatal care leave and pay

The Act is due to come into force on 6 April 2025, allowing parents to take up to 12 weeks’ paid leave (and if eligible, pay) if their baby is admitted to hospital in the first 28 days after birth for a continuous stay of at least a week. The right begins on day one of employment and runs in addition to existing family-friendly leave.

Employers should therefore ensure that their family-friendly policies reflect these changes ahead of the April changes.

Right to switch off

The Government has said that it will introduce the right to switch off in a new statutory code of practice, to address work-life balance for employees and provide employees with the right to disconnect from work outside of their contractual hours.

However, further details on this intention have not been released at the time of writing.

It is expected that the Government will seek consultation on the changes before rolling them out.

April increases

April tends to be the main month for increases to numerous employment payments. In particular:

• The national minimum wage will increase from £11.44 to £12.21 per hour for workers aged 21 and above.
• Employer National Insurance Contributions (NICs) will increase from 13.8% to 15% and the threshold at which they are payable will decrease from £9,100 to £5,000.
• Statutory sick pay will increase from £116.75 to £118.75 per week.
• We also expect to see an increase in the cap on unfair dismissal compensation beyond £115,115, as well as other awards.

Court decisions

Some notable judgments involving employment law expected this year include:

• the Employment Appeal Tribunal’s (EAT) decision in the equal pay case of Thandi & ors v Next Retail;
• the Court of Appeal’s judgment on Higgs v Farmor’s School, which relates to religious discrimination and gender-critical beliefs; and
• the Supreme Court ruling on the definition of “woman” under the Equality Act 2010 (For Women Scotland Ltd v Scottish Ministers).

The case of Miller v University of Bristol is also listed to be heard by the EAT later this year, in an appeal against an employment tribunal’s decision that Miller’s anti-Zionist beliefs were held to be protected philosophical beliefs under the Equality Act 2010.

What can employers do now?

In many respects, 2025 is a “wait and see” year. It is, however, worthwhile for employers to start strategising and considering whether to bring forward any potential changes in the workforce before they become more challenging to implement in 2026 and/or before employer NICs increase in April 2025.

The consultation on the Bill closed in December 2024 and the Government’s response will be published in due course.

If you have questions or concerns about employment law changes, please contact Emma Clark and Imogen Dale.