With significant changes to employment law on the horizon, knowing what to expect in 2025 by way of changes is key. Whilst there is currently a fair degree of uncertainty as to when some of the forthcoming proposed reforms will come into effect, there are some important dates to note in Q1 and Q2.

January 2025

  • New UK Corporate Governance Code: The majority of the 2024 UK Corporate Governance Code has come into effect and will apply to financial years beginning on or after 1 January 2025 (the new provisions relating to risk management and internal controls will come into effect a year later, on 1 January 2026).
  • New Tribunal rules: From 6 January 2025, there will be changes to the Employment Tribunal Rules, to be followed by a new Practice Direction impacting how employers submit their defences to claims.
  • Collective consultation awards and fire and rehire: Where an employer fails to carry out required collective consultation, currently, a Tribunal may order them to pay a protective award of up to 90 days’ pay to each employee affected. From 20 January 2025, the level of such an award can be increased by up to 25% if the employer has ignored the relevant Code of Practice, including the Code of Practice on Dismissal and Re-engagement.

April 2025

  • Annual rate increases: On 1 April 2025, there will be an increase in the National Minimum Wage, National Living Wage and the weekly rates of Statutory Sick Pay, Statutory Maternity Pay, Maternity Allowance, Statutory Paternity Pay, Statutory Shared Parental Leave Pay, and Parental Bereavement Pay. We also expect increases to the unfair dismissal compensatory award cap and the ‘Vento bands’ (giving guidance on the level of injury to feelings awards), to be announced in February or March (to take effect in April).
  • Employer National Insurance: From 6 April 2025, the rate of employer national insurance will increase from 13.8% to 15% and the earnings threshold will be lowered to £5,000 from the current £9,100.
  • Neonatal leave and pay: The Neonatal Care (Leave and Pay) Act 2023 is expected to introduce statutory paid leave (12 weeks) for eligible employees whose newborn baby is admitted to neonatal care.
  • Gender pay gap reporting: 2025 reports are due by 4 April.

Other developments expected in 2025: The Employment Rights Bill looks set to reshape the current employment law landscape. The Bill sets out significant developments, including in relation to unfair dismissal, fire and rehire, collective redundancies, zero hours (and ‘low hours’) contracts, trade union rights, family leave, among other areas. A number of consultations arising from the Bill are expected this year, which should provide more information on the proposals, and the current thinking is that the Bill will receive Royal Assent in the second half of 2025. However, implementation of most of the changes is not likely until 2026. A key proposed change for employers is the removal of the service requirement for unfair dismissal claims. The Government has said that the right not to be unfairly dismissed will not become a day one right before Autumn 2026.