As we step into 2025, significant changes in UK employment law are on the horizon, largely driven by the Employment Rights Bill. As usual there will be national minimum wage increases from 1 April 2025 and an increase to family related leave payments, statutory sick pay and Tribunal compensation awards.

Here’s what you need to know:

National Minimum Wage to increase

From 1 April 2025 the National Minimum Wage will be:

• National Living Wage for those aged 21+ £12.21 per hour

• National Minimum Wage for those aged 18 – 20 £10.00 per hour

• Young Workers Rate for those under 18 £7.55 per hour

• Apprenticeship Rate £7.55 per hour

Family Related Leave Payments 

From April 2025 Statutory Pay for maternity, paternity, adoption, shared parental and bereavement pay will increase from £184.03 per week to £187.18 per week.

Statutory Sick Pay

From April 2025 Statutory Sick Pay will increase from £116.75 per week to £118.75 per week.

Here we have summarised a few key developments that you should be aware of in the coming year.  We will keep you updated on these changes, as the year progresses:

Artificial Intelligence (AI) in the Workplace

This is an area of rapid growth, and the Government have promised to publish a consultation and “… will seek to establish the appropriate legislation to place requirements on those working to develop the most powerful artificial intelligence models”.  With the growing prevalence of AI in the workplace, there is an increasing need to evaluate and address the associated risks. In March and November 2024, the government and the ICO issued new guidance specifically focused on the use of AI in HR and recruitment. Further guidance and best practice recommendations are expected in 2025.

The Paternity Leave (Bereavement) Act 2024

This is expected to take effect in 2025.   The Act will eliminate the standard 26-week minimum service requirement for fathers and partners to qualify for paternity leave in cases where the mother (or the adoptive parent or intended parent in a surrogacy arrangement) passes away shortly after the child’s birth. This change will grant bereaved partners the right to paternity leave from the first day of employment.

Draft Equality (Race & Disability) Bill

This is to be published in 2025 although we are expecting implementation of the legislation to be slow and fall beyond 2025. This is expected to make it easier, for those discriminated against due to their ethnicity or disability, to bring unequal pay claims.  It will also introduce mandatory ethnicity and disability pay reporting for employers with 250 or more employees.

Neonatal Care (Leave & Pay) Act 2023

The Neonatal Care (Leave and Pay) Act 2023, is expected to come into effect in April 2025. This legislation will introduce a new statutory entitlement to leave and pay for parents whose babies require neonatal care.

Neonatal care leave will be a “day one” right for employees whose baby is admitted to hospital for medical or palliative care lasting at least seven consecutive days within the first 28 days after birth. The duration of the leave will correspond to the length of the hospital stay, ranging from a minimum of one week to a maximum of 12 weeks. Parents will have the flexibility to take this leave at any point within the first 68 weeks following the baby’s birth.

To qualify for statutory neonatal care pay, employees must meet the eligibility criteria of having at least 26 weeks of continuous service and earning at least the lower earnings limit. Statutory neonatal care pay is expected to align with the prescribed statutory rate for other forms of family-related leave, as outlined above.

Flexible working

Flexible working continues to evolve under the Employment Rights Bill. While employees already have a day-one right to request flexible working, new measures will require employers to:

• Provide specific reasons for refusing a request.
• Demonstrate that the refusal is reasonable.

Sexual harassment

Building on the Worker Protection Act 2023 and the new duty to prevent sexual harassment, the Employment Rights Bill introduces a heightened duty for employers to take “all reasonable steps” to prevent sexual harassment, both by colleagues and third parties. This expanded duty will also cover harassment related to other protected characteristics.

Additionally, reporting sexual harassment will now explicitly qualify as whistleblowing, providing stronger protection for employees who come forward.

Collective Redundancies

When the changes outlined in the Employment Rights Bill come into effect, it will mean the employers will need to take into account the proposed redundancies across the whole business and not just at an individual site or establishment. This change will likely capture more redundancy scenarios under the collective consultation rules, ensuring wider employee protection and requiring businesses to carefully plan their workforce restructuring.

Fire & Rehire

The controversial practice of “fire and rehire” remains a focal point of reform.   Under the Employment Rights Bill, dismissals to enforce contractual changes will be automatically unfair unless there are financial difficulties which threaten the employer’s ability to carry on business as a going concern, so there is no alternative but to fire and rehire.

Family Related Leave

Paternity Leave is to become a day-one right and employers will be prohibited from dismissing employees who were pregnant within six-months of their return to work except in narrowly defined circumstances (to be set out in further regulations).

Next Steps

The Employment Rights Bill is expected to come into force in autumn 2026. As you can see, the employment law landscape will bring significant changes that will impact both employers and employees. Additional consultations with stakeholders are anticipated in 2025, to address matters to be incorporated into the supporting regulations for the new legislation. If you’re unsure about what these changes mean for you, don’t worry – we’re here to help guide you through and make sure you, and your workplace, are ready for what’s to come.

For employment law advice, contact our Employment Partner, Lindsey Abbott.