As we progress through 2025, significant changes in UK employment law have already come into force or are on the horizon, particularly in relation to wage reform and enhanced employee rights. In this article we set out a summary of the most important changes.
Wages and increased statutory entitlements
A major change for some employers in 2025 will be the increase in the rates of the National Minimum Wage and National Living Wage that came in on 1 April 2025. National Living Wage for over 21’s increased to £12.21, National Minimum Wage for 18–20-year-olds increased to £10 and National Minimum Wage for 16–17-year- olds and Apprentice Rate increased to £7.55. Employers will need to increase pay where necessary to ensure compliance which could mean there is less of a distinction between junior and senior staff.
Other statutory rates that rose on 6 April 2025 include Statutory Sick Pay (increased to £118.75 per week) Statutory Maternity Pay and other family related leave pay (increased to £187.18 per week) and the Lower Earnings Limit (increased to £125 per week).
Neonatal care leave and pay
This is a new right for employees which came into force on 6 April 2025 and gives parents a right to 12 weeks’ leave and pay when their baby requires neonatal care if they meet certain eligibility criteria. The Statutory Neonatal Care Pay (SNCP) will be paid at the initial statutory rate of 187.18 or 90% of earnings, if lower. As with all statutory leave, employers have the option of topping up SNCP with enhanced pay for all or part of the leave period, provided of course the discretion an employer uses to top up statutory pay is applied fairly and consistently to all applicable staff.
Paternity leave for bereaved partners
The Paternity Leave (Bereavement) Act 2024 was passed in May last year and is expected to come into force shortly. It provides a day one right for bereaved partners to take paternity leave when the mother (or a person that a child is placed, or expected to be placed, with for adoption) dies. Additionally, increasing the right to paternity leave in bereavement cases from two weeks to 52 weeks and implementing additional redundancy protection for bereaved partners (as with maternity leave) has also been discussed although not yet confirmed. Given these changes on the horizon, employers may wish to consider how they will introduce and implement a policy to cover this entitlement once the specifics have been confirmed.
Significant changes contained in the Employment Rights Bill
The Employment Rights Bill 2024-25 (the Bill) was introduced in the House of Commons on 10 October 2024 and received its first reading in the House of Lords on 14 March 2025. It is now progressing through the House of Lords. Accompanying this Bill, the government released a ‘Next Steps to Make Work Pay’ document, outlining plans for future reform. Some of the key changes may include:
- Enhanced Unfair Dismissal Rights – a ‘day one’ right for employees not to be unfairly dismissed (rather than a qualifying period of 2 years’ service) “no sooner than” Autumn 2026. The legislation will extend the circumstances in which employers may fairly dismiss employees who are in a probationary period (which will be called an ‘initial period of employment’). The length of the statutory probationary period to which these provisions will apply has not yet been fixed but the Government has indicated that it favours a period of six to nine months.
- Increasing Employment Tribunal claim time limits – from three months to six months (for almost all claims).
- Expanding the right to receive Statutory Sick Pay – making it a “day one” right and removing the lower earnings limit when calculating eligibility.
- Strengthening the right to request flexible working – employers could only refuse requests if they have a “reasonable” basis to do so, can state the specific ground(s) for refusal and explain why the refusal is reasonable.
- Expanding family rights – such as making paternity leave and unpaid parental leave “day one” rights, giving unpaid bereavement leave, and greater protections for pregnant women, maternity leavers and those who return to work after maternity leave.
- Strengthening sexual harassment protections – employers must take all reasonable steps to prevent sexual harassment and will be liable for third party harassment of employees in respect of all types of harassment. Also, any disclosures about sexual harassment will be classified as “protected disclosures”, granting those who report protection under the whistleblowing regime.
- Trade union reforms – making it easier for unions to be recognised by law, giving unions the right to access workplace and providing more time for union representatives to do their jobs.
- Reforms to collective consultation – the current threshold of 20 or more employees at a single establishment may be lowered to trigger collective consultation across an entire company, meaning more situations will require consultation with employees. Employment tribunals may also have the ability to significantly increase or decrease compensation awards for employers who fail to adequately consult with employees during a redundancy process. There are also plans to close the maritime redundancy notification loophole so that operators providing regular services in British ports cannot avoid collective consultation.
- End “fire and rehire” practices – dismissals for refusing to agree to a change to contract terms would be automatically unfair (unless the employer genuinely has no other choice).
- Reforms to zero hours contracts – giving rights to guaranteed hours, fair notice of shifts and compensation for shifts that are cancelled or end early.
The government expects that most changes set out in the Bill will not come in until 2026. In the meantime, it is undertaking various consultations on the proposed reforms and says it will provide regulations, guidance and codes of practice to assist with implementing the changes when the time comes. Dixcart Legal will of course keep you updated on these reforms as the Bill progresses.
