Employment Law Focus

Amy: Hello, welcome to Employment Law Focus, the podcast that keeps you informed on the latest developments in the world of work. I'm Amy Stokes...  

Charlie: ...and I'm Charlie Rae...  

Amy: ...and we are both partners in the employment team at TLT. Today we're going to dive into what's on the horizon for employment law in 2025. The next couple of years are set to bring some pretty significant changes that could reshape the workplace as we know it. From enhanced worker protections to evolving rights for parents and carers, 2025 is shaping up to be an interesting year for employers and employees alike. And it wouldn't be an Employment Law podcast without an update to the employment bills as we discussed in our last podcast. 

We're also going to explore some of the other key reforms to protective awards for collective consultation, the failure to prevent fraud offences being introduced and the much-anticipated implementation of the Neonatal Care Act and some key case decisions we expect in 2025. We are going to unpack the critical changes every business owner, HR professional, and employee, needs to know. So, grab a coffee, take a seat, and join us as we break down what to expect in Employment Law this year. 

So, I'm going to start us off with the updates to the Employment Rights Bill. The majority of changes to the Employment Rights Bill will not take effect until 2026, but there are a number of consultations which have already taken place. 

That includes strengthening statutory sick pay, creating a modern framework for industrial relations, collective redundancy, so that's the fire and rehire, and also zero hours. And these consultations are going to continue on different matters through 2025. There's also some indication that the bill will be passed into law in summer 2025, but we're not quite sure yet, so watch this space.  

No sooner did Charlie and I do the last podcast were the first batch of government amendments to the Bll were published. These were pretty substantial actually, and we expect more to come. And the key headline-maker from those was the announcement of a potential increase in limitation periods (so that’s the time that employment tribunal claims can be brought) from the current three months up to the period of six months.  

Charlie: It’s interesting, isn’t it, Amy? What do we think will be the benefits or the drawbacks of that change?  

Amy: This has been in discussion for a long time particularly in respect of discrimination claims, where sometimes it may be difficult for a claimant to bring a claim in time due to the impact of the discrimination or other matters such as in a pregnancy claim where the claimant has had a baby, for example.  

In those circumstances, the employment tribunals already have the power to extend time where it's just and equitable to do so in the circumstances, and that's actually commonly allowed, as we well know. More challenging, though, I think, is in the unfair dismissal field, I would say. This is obviously going to create more uncertainty, but it does give more time, I guess, for the parties to reach a resolution before a claim is filed. That can only be a good thing from that perspective. I think my main concern in all of this is going to be the length of time that this is already taking cases to reach final hearing after a claimant is dismissed or a discriminatory action takes place, because obviously this is going to add an additional three months on to that as well.  

We’re already having cases listed well into 2026 now, in some tribunals, so it is challenging for all witnesses in those circumstances (whether on the employer or employee side) to recall matters so long ago. 

Charlie: We had a chat recently, Amy. Some of us are having 2027 cases listed now, aren't we, in our group?  

Amy: Yeah, it's absolutely crazy how that, as you say, 2027, in a couple of, I think it's London tribunals we're getting that at the moment, so...  

Charlie: Yeah, we were saying last time, weren't we, that the tribunals are already struggling to cope. So, on all of these changes, if they're just going to lead to more claims, how is the tribunal system going to be set up to deal with that? And not sure we have any good answers to that yet, do we? But that's hopefully “a watch this space” one.  

Amy: Yeah, I think so. It's a theme really that runs through all of the points that we're going to discuss today about how the tribunal is going to cope with all these additional reforms because it does tend to fall to the tribunal to enforce any claims that arise out of those changes in any event. So hopefully we have some kind of commitment from the government on further funding for the tribunal system to ensure that it's able to cope.  

And then, moving on really and linked to the Employment Rights Bill is the Draft Equality Race and Disability Bill that we think may be published in spring 2025. That's the plan at the moment. It's intended that this draft Bill will mirror measures in the Equality Act that relates equal pay and gender pay reporting. And the briefing notes that we've already seen explain that the draft Bill will aim to tackle inequality for ethnic minority and disabled people by enshrining the law to the full right to equal pay for ethnic minorities and disabled people and also introducing mandatory ethnicity and disability pay reporting for larger employers. So that's those with 250 or more employees. And the aim of that is to help close the ethnicity and disability pay gaps.  

So, whilst the Bill, the draft Bill, is likely to be published this year, we don't actually expect any of the reforms in that to take place until 2026. So, there's plenty of time to prepare. But if you do fall into that larger employer category, then it's probably worth running those calculations alongside your normal gender pay gap calculations you do this year, just to see if there are any areas of focus potentially, just to make sure that you are ready for those changes.

Charlie: So, we're going to move on to another change, one that's very imminent actually at the time that we're recording this podcast and many of you will recall the new statutory code of practice on dismissal and re-engagement which we saw in July last year, 2024. And a part of that code provides that tribunals are allowed to increase the compensation on any award that they make by up to 25% where the employer has unreasonably failed to comply with any aspect of the code. And a change that we're seeing this year is that from the 20th of January, a protective award for a failure to comply with the collective redundancy obligations in the context of a fire and rehire (as it's a colloquially known) situation is going to be included in the types of compensation that can be uplifted by 25%.  

So, what this is going to mean is that the maximum exposure for employers in a protective award claim where it involves a fire and rehire (a dismissal and re-engagement situation) is potentially now going to be greater than the 90 days gross pay per affected employee. So quite a big change there.  

Amy: That's really interesting, Charlie. So, what do we actually think the impact on employers will be in practice?  

Charlie: Yeah, I mean, it's another change, I guess, that employers will think is exposing them to potentially greater employment costs. I think alongside the code, alongside the changes that people know are coming down the path with the Employment Rights Bill and the strengthening of the dismissal and re-engagement provisions and knowing that the potential exposure can be even higher, we think it's going to make employers probably more cautious in these sort of collective redundancy style situations that involve dismissal and re-engagement.  

We may well find that in any negotiations for settlements that the price of a settlement might bake in the suggestion that an uplift might be awardable. So, I think many employers are going to see it as increasing the employment tariffs that they might think they're exposed to here. A change actually that's allied to this, which is worth noting, is that the government had recently consulted with the consultation closing early December last year, 2024, on views about the compensation thresholds for collective redundancy consultation claims. And the government has been asking for views on two alternative options. And those of you who are looking at it at the time will recall that the options given were either to increase the protective award that could be awardable from the current 90 days by doubling it potentially to 180 days, or the alternative option given was to remove the cap altogether and allow the compensation awardable to be at the discretion of the employment tribunal.  

So, under either of those options, the tribunal would continue to be able to determine what's a just and equitable protective award, having regard to the circumstances and the severity of the employer's failure. But certainly, some feedback we've had anecdotally from clients that we've spoken to about that consultation is that it's generally being opposed, certainly by employers, as may not be a surprise to hear. I think it's quite a substantial increasing in the tariff that's being proposed by the government there. So, we'll be interested to see what the consultation outcome is once that's released by the government and to know whether or not the protective award for failure to inform and consult in a  collective redundancy situation is going to substantially increase as a liability, which is what's on the table at the moment.  

So yeah, some big changes there and some other changes that are more routine to just mention for our listeners is to do with the various rates and limits some of them we know some of them are waiting to hear like the maximum compensation award for unfair dismissal but ones that we do know about are in relation to the national minimum wage and some changes that we're seeing there from the 1st of April we'll see the top rate, the ages 21 and over rate, increasing by nearly 7 % to £12.21 per hour. 

Some bigger increases on the lower age limit rate. So, the 18 to 20 rates are going up to £10 an hour, which is just over a 16 % increase. And the 16 to 17 rate or rate for apprentices by even more, with an 18 % increase for them up to £7.55 per hour. So, the government's stated aim is to align minimum wages with inflation and to achieve its target of two thirds of median earnings. So certainly, when these changes come through, we're obviously going to be recommending employers need to make sure their payroll systems are adjusted. This is the kind of annual warning I suppose we give to ensure that there's no inadvertent missing of the new rates when they come through and I guess to increase or reflect this in their budgets and recognising I suppose that there could be some knock-on effects here. Some of our clients talk about the prospect of pay compression between their more junior and senior staff, which is something the national minimum wage changes will reflect.  

So, that’s the national minimum wage, we’re also seeing, as has been much talked about as a result of the most recent budget, but we'll see the changes to the employer's national insurance contributions from the 6th of April and a rise in the secondary class one NICS rate from 13.8 % to 15% alongside a reduction in the secondary NICS threshold from £9,000 to £5,000, which has the effect of making more earnings subject to national insurance contributions. There will, however, be an increase in the Employment Allowance from £5,000 to £10,500, which will provide some relief for smaller employers. But there’s some quite big and much spoken about changes there that've been in the news a lot.  

Amy: Yeah, that is interesting actually, just picking up firstly on one of the points that you made in relation to the minimum wage actually. And it's actually, it is interesting that in the King's Speech, Labour made a commitment to removing age categories for the minimum wage, which might be something that they're looking at which could have a real impact. Obviously, as you mentioned about the wage compression already and between employees of different ages and new starters and stuff like that, that's quite key really that they've given that commitment. But also picking up on the national insurance changes, there's been a lot written about this. Have you had any feedback of what clients would make of this?  

Charlie: A bit, yeah, I guess many of us have haven't we? I mean some of it's probably politically motivated comments or political angles on it that go beyond this podcast. I think what we can say though is that a lot of clients are recognising that their payroll costs are going to be quite significantly hit and that those clients that are looking at changes to schemes such as salary sacrifice arrangements or reorganisations that they have in the pipeline are already starting to think about “what will we do with the changes that we are thinking about in the knowledge that the national insurance changes might have an impact on what we are going to change”. And so, yeah, we're seeing, I think, particularly larger employers or those with many employees earning above the reduced threshold, that they're starting to factor that into their budget. So, yeah, I think that will be a big change for employers, regardless. What we're looking out for, I mean, we obviously have many of the normal rate changes. Some of them we're still waiting to hear.  

A couple to also mention, some quite modest changes to the standard family allowance rate, statutory maternity pay, and shared parental pay and paternity pay. That's going up to just over £187 from the current £184. Statutory sick pay, also quite an interesting one to be noting, that's going up by £2 from £116.75 to £118.75. 

Amy: I'm going to talk about the failure to prevent fraud offence, which is a pretty significant change, actually. And that's coming into force on 1st September this year and we had some guidance on this back in November from the Home Office. It's been on the cards for some time before that as well, so the headlines for our listeners. This applies to large organisations who are going to need to develop and implement reasonable fraud prevention procedures. If you don't have those procedures in place then large employers, large organisations, could face a criminal prosecution and unlimited fine where an employee, agent, subsidiary, or other associated person commits a fraud intending the benefit of the organisation or a client of that organisation. 

So, these procedures that large organisations should be putting in place should be informed by the same six principles as in the anti-bribery and tax evasion facilitation guidance. They have been slightly re-ordered though for the failure to prevent fraud offence and in order in the guidance those principles are: firstly a top-level commitment, secondly risk assessment, then the proportionate risk-based fraud prevention procedures, then due diligence, then communication (which is the training piece), and also monitoring and review, as you would expect. When we look at the guidance, there seems to be a real focus on the top-level commitment from directors, partners, and senior managers, and also risk assessments by the home office. So, it's key for employers to note those two areas of focus.  

Charlie: So yeah, interesting, that one. A lot to get your head around there. What do we think employers should be doing now then, Amy? Any advice that we're currently giving on that?  

Amy: Yeah, so there are obviously there are various teams in TLT who have been involved in providing advice, and there’s lots of guidance on our website and things as well, but organisations impacted by this will need to have their fraud procedures ready, of course, and ensure compliance with that guidance which was produced ready for September and, in a completely intentional sales pitch, we here at TLT (some of the whizzy people at TLT) have produced a risk assessment tool for employers which will enable them to proactively manage their fraud risk and ensure compliance with the new standards. The tool is designed to help employers identify the risk ratings and also to pinpoint any areas of concern that they can work on as well. So worth checking that out and we'll put a link to it in the podcast information as well for anybody that is caught within the new requirements. 

Charlie: One fairly new development, Amy, is that we know that the neonatal care leave and pay reforms that originally were brought in by the Conservative government are actually going to be laid before Parliament in new regulations that this Labour government have put forward. If approved, those are going to implement the new statutory entitlement to neonatal care leave and pay with effect from the 6th of April this year. It should affect quite a lot of parents actually, around 40 ,000 babies, so say the stats spend over one week in neonatal care each year, and the government estimates that this is a right that might impact up to 60 ,000 parents who might be eligible for these new rights. So just having a quick look at what these involve, the new right to neonatal care leave will apply where a baby is born on or after the 6th of April this year, 2025, and who receives neonatal care starting within 28 days of the birth and who then goes on to spend seven or more continuous days in care. Interestingly, it's going to be a day one right so it can be taken by all eligible employees from the first day of their employment. 

Now, there's quite a lot of detail in here. I'm not proposing in this podcast to go through all of that detail. There is going to be some government guidance published, we're told, and ACAS are saying they're also going to publish some guidance on this new entitlement as well once the legislation's in force. But what we do find is that there's quite a bit of dialogue about what neonatal care means. There's quite a lot about who's eligible. A couple of quick highlights there. Worth noting that the neonatal care has to be taken within the first 28 days of the birth, got to continue for at least seven consecutive days. So what this means is that employees are going to be unable to claim neonatal care leave where the baby's medical care is required after those first 28 days. 

It's a right that both parents are going to be eligible for and those eligible employees can take one week's leave for each week that the baby receives neonatal care without interruption. And then this is going to be capped at 12 weeks. So the week will begin on the day after the care started. Interesting also is that the leave can be taken on top of any other leave that the employee might be entitled to. So that might include say maternity leave or paternity leave. But the leave needs to be taken within 68 weeks of the baby's birth. So what we're likely to find is that that will probably be tagged on to the end of some other family leave that the parent's already taken, given that they're most likely to be on some other form of family leave at the time the baby is in need of that neonatal care. In terms of what it's going to be paid at, as we'd expect, it's going to be paid at the statutory prescribed rate, which initially would be just over £187 from April 2025 or 90 % of earnings, if that's a lower sum. And to actually be entitled for the pay, the parents must have 26 weeks continuous service and meet an earnings threshold to be eligible for it.  

So the leave is a day one right. But the pay is a six month right. So one to watch out for, the government has said it's going to be publishing its guidance on its GOV.UK website ahead of the 6th of April, we're told. So watch out for that. I think for now it's probably one where employers should start to familiarize themselves with what these new rights are going to look like, start looking at their policies before April when it comes in, maybe think about setting up some training for managers and updating the intranet where Family Leave is referenced so that employees are aware of the support and entitlements that they'll have. Also, I guess, worth checking that payroll systems and providers are going to be able to accommodate neonatal care pay calculations and payments when the changes come in. So, one to watch out for, certainly we at TLT will be issuing articles that explain these new rights, so watch out for them. 

Amy: So, Charlie, we've kind of covered most of the legislation updates and things like that and rates and things that we’re expecting coming up. Is there anything that you've spotted from a case law perspective that our listeners might be interested in? 

Charlie: Yeah, we often have years, don't we, where we see what decisions the EAT or the Court of Appeal or the Supreme Court are likely to deliver during the year and some of them will look ahead and say, hey, that will be a very interesting one to see if that makes a big change in direction on one of the areas of law that are of particular interest to employers. We've seen that quite a bit with holiday pay cases over the years. I don't think there's anything groundbreaking that I've spotted this year, I would say, a couple of ones that I thought I'd mention, because they will be quite interesting when we see the decision on that. So, one is Sullivan v The Isle of Wight Council, the decision being looked at there is whether the Employment Appeal Tribunal was correct to hold that an external job applicant didn't fall within the extended definition of “worker”. So, it would be interesting to see whether that is upheld as a decision. 

Another quite interesting case, I think, is going to be the University of Bristol v Miller, which is being considered by the Employment Appeal Tribunal. They're going to be looking at whether the ET was correct to hold that an academic's anti-Zionist beliefs qualified as a protected philosophical belief under the Equality Act and whether his summary dismissal was an act of direct discrimination and unfair. So that will be quite interesting to see whether the developments that we've seen on the protected philosophical belief scope is something that will continue to be developed under quite an interesting case law decision there. I think although it's probably fair to say, Amy, we're not going to see any big hitting new changes coming into force in 2025, obviously the Bill will see a lot of them being consulted about but they’re, as you were saying earlier, unlikely to be seen this year. 

One thing that is for sure is that with our government prioritising employment law reform, I think we can expect to see numerous developments throughout this year and into next year. It’s very much a case of “watch this space” for us employment lawyers. One that I particularly noted of interest actually which came into the press this month, January, is the new Bill that's being aimed at granting 10 days’ paid leave every year for domestic abuse victims. And that's something that was introduced as a Private Member's Bill in the House of Commons only very recently. If that were passed, then the Domestic Abuse (Safe Leave) Bill, which is what it's being called, would allow survivors of domestic abuse to have time off to deal with challenges such as finding themselves some alternative accommodation or taking steps to protect their family members, for example. So that would be quite an interesting one to keep an eye on and that's a new thing that we weren't seeing on our radar when we, for example, did our most recent podcast prior to this one.  

Interestingly, it's not something that's a new concept though. We saw that survivors of domestic abuse are guaranteed up to 10 days’ paid leave in Northern Ireland, which was something that was passed a couple of years ago back in 2022 and we see that there are similar laws that exist in other countries in the world, such as Australia or New Zealand.  

So, thanks everyone for listening. I think it's going to be an interesting year ahead and we at TLT will be keeping a watchful eye on any interesting developments that we find during the year. We’re also likely to find ourselves paying close attention to what’s in these Employment Rights Bill consultations, I think Amy and I, we’re both expecting to have at least one of our further podcasts to examine what’s in the consultations which would give us a much better flavour of what the shape of those new legislations might look like. But thanks everyone for listening. We look forward to speaking with you on our future podcast and goodbye.  

Amy: Goodbye, thank you. 

The information in this podcast is for general guidance only and represents our understanding of the relevant law and practice at the time of recording. We recommend you seek specific advice for specific cases. Please visit our website for our full terms and conditions.