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As the nation emerges from the Christmas break to start a brand-new year, we take a look at what is coming up in employment law over the coming months.
This year at a glance...
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January 2025 |
Tribunals given power to uplift protective awards |
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Early 2025 |
FCA Policy Statement on Non-Financial Misconduct is expected |
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April 2025 |
Increase to statutory rates & national minimum wage and changes to national insurance Possibility that the right to neonatal care and pay may come into force Possibility that the right to paternity bereavement leave may come into force |
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Spring 2025 |
Draft Equality (Race and Disability) Bill may be published |
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Summer 2025 |
Employment Rights Bill may be passed into law |
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September 2025 |
Failure to prevent fraud offence comes into force |
The Employment Rights Bill
It is widely anticipated that the Employment Rights Bill (ERB) will be passed into law in the summer of 2025. This timing will depend on how much it is debated by Parliament. We know that most of the proposed reforms cannot come into force until further regulations are passed, which will take some time. As a result, we anticipate that the impact of the ERB will be limited during 2025.
The ERB is currently under scrutiny by a Parliamentary Committee, which is making amends to the wording before reporting back to the House of Commons in January 2025. One of the more noteworthy amends recently proposed by the government is to increase the time limit for all Employment Tribunal claims from 3 to 6 months. Where a dispute is ongoing (for example, in a grievance situation), an increase to the limitation period may assist employers, giving them a longer timeframe for negotiation & settlement before a formal claim is lodged against them. On the flip side, it is likely that a longer limitation period will result in increased uncertainty for employers and could only further increase the number of claims in an already back-logged tribunal system. This in turn could lead to additional delays listing hearings and issues with witnesses being asked to remember events that happened some time ago. We may see an increased trend in employers using mediation and commercial settlement to deal with this uncertainty and to avoid claims lingering for a significant amount of time.
At the end of last year, the government consulted on various proposals in the ERB. We await the government’s responses to those consultations in due course and understand that further consultations are due to be published in 2025 on other aspects of the ERB.
The Draft Equality (Race & Disability) Bill
The Draft Equality (Race & Disability) Bill (Equality Bill) is yet to be published, but we understand that it is the government’s intention to do so “within the current Parliamentary session” i.e. by Spring 2025. Further details on the Equality Bill are set out in our previous insight. As with the ERB, the Equality Bill will have to be debated by Parliament before being passed into law and we are expecting the government to carry out consultation on it too. Therefore, we do not anticipate that any reforms proposed in the Equality Bill will take effect in 2025.
Changes to employment law anticipated in 2025
Although we are unlikely to see reforms in the ERB or Equality Bill pass into law over the next 12 months, the following is a summary of the changes that we know, or anticipate, may take place this year:
- As set out in our previous insight, a new Statutory Code of Practice on Dismissal & Re-engagement (the Code) came into force on 18 July 2024. This provides that the Tribunal may increase compensation by up to 25% where an employer has unreasonably failed to comply with the Code.
- From 20 January 2025, a protective award for failure to comply with collective redundancy obligations is included in the types of compensation that can be uplifted by 25%. This means that the maximum exposure for employers in a protective award claim will be greater than 90 days’ gross pay per affected employee. We anticipate that this change could make employers more cautious in collective redundancy situations involving dismissal and re-engagement.
- The new government recently consulted on the possibility of increasing the protective award to 180 days. Feedback we have received from our clients suggests that employers are generally against this proposal, but we will need to wait for the government’s response to the consultation.
- If you operate in the Financial Services sector, the FCA has confirmed that it intends to publish a final policy statement on Non-Financial Misconduct ‘early in 2025’.
- For more information on this, please see FCA findings on non-financial misconduct - how should firms respond and Will the FCA seize the opportunity to codify guidance on non-financial misconduct?.
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As usual, the government intends to increase the various statutory rates with effect from 6 April 2025. The new rates can be found here. Increases to the national minimum wage will take effect from 1 April 2025 and further details can be found here.
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The government is making changes to the Class 1 National Insurance Contributions Secondary Threshold, the Secondary Class 1 National Insurance contributions rate and the Employment Allowance from 6 April 2025. Further details can be found here.
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The previous government confirmed that legislation would come into force in April 2025 ‘at the earliest’, giving employees a right to statutory leave and pay where their baby has received, or is receiving, neonatal care. However, regulations setting out how the relevant entitlements will work have still not been published, so the position remains unclear.
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What we do know from the Act is that neonatal leave will apply from day one of employment and that neonatal care must start within 28 days of birth and continue for at least 7 continuous days. The length of neonatal care is yet to be defined, as is the rate of neonatal care pay (but we anticipate that it will be the same as for other types of family leave).
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The previous government passed legislation extending paternity leave for the partners of mothers (or someone with whom a child is placed or expected to be placed for adoption) who die in the first year after birth or adoption. Regulations are still required to fill in a lot of the detail about what this right will look like. However, the intention of the new legislation is to provide such individuals with 52 weeks’ leave during the first year of their child’s life.
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The previous government intended to bring the relevant legislation into effect as soon as possible and by April 2025 and, prior to the recent election, the Labour Party confirmed that it would pass the necessary regulations. However, we are yet to see anything, so it may be that this Act comes into force later than originally anticipated.
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As set out in our previous client briefing, the Home Office has now issued guidance on what constitutes “reasonable fraud procedures” to provide a defence to the failure to prevent fraud offence introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The failure to prevent fraud offence will come into force on 1 September 2025 and ‘large organisations’ must have their fraud procedures in place by then.
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Employers should take steps now to ensure that their fraud procedures comply with the guidance issued by the Home Office so that they are ready in time for 1 September 2025. To assist with this, TLT has developed a risk assessment tool for employers to proactively manage their fraud risks and ensure compliance with the new standards. This tool is designed to help employers identify their risk ratings and pinpoint areas of concern.
Although we may not see any significant new legal reforms coming into force in 2025, one thing is for sure: with the new government prioritising employment law reform, we can expect to see numerous developments throughout this year and into the next – so watch this space!
We will keep you updated on any significant proposals as the year progresses, but in the meantime if you have any queries on the content of this briefing, please contact a member of the TLT Employment Team.
Co-author: Victoria Wenn
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2025. Specific advice should be sought for specific cases. For more information see our terms & conditions.
Date published
08 January 2025
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