Employment law changes to watch in 2025

The coming year will see some key changes to the employment law landscape in the UK. Labour’s Employment Rights Bill (“ERB”) will continue its passage through Parliament and employers will want to do all they can to prepare for the changes it will introduce (noting that the vast majority of reforms are not set to come into effect until 2026). 

There are plenty of other notable events in the 2025 employment law calendar to prepare for; we summarise these below. 

The Employment Rights Bill 

Consultations in respect of reforms proposed by the ERB will continue this year.

“Day one” protection from unfair dismissal

One of the significant changes proposed in the ERB is the introduction of "day one" protection from unfair dismissal. Currently, employees need two years’ service before they acquire such protection.

The government is proposing that the new right be subject to an “initial period of employment”(“IPP”), akin to a probationary period, during which dismissals will be subject to a "lighter touch" regime. The details of this process are still under consultation but we understand that current proposals are for the IPP to be nine months in duration.

The Government has confirmed that these reforms will not come into effect until at least Autumn 2026. In the meantime, the existing two-year qualification period will remain in place.

Extension of “day one” rights

Beyond the changes to the unfair dismissal regime, the ERB also introduces a suite of new "day one" rights, which include:

• Statutory Sick Pay (SSP): The removal of the lower earnings limit and the three-day waiting period means all employees (regardless of length of service) will be eligible for SSP from their first day of absence.
• Paternity and parental leave: Statutory paternity and unpaid parental leave will both become day one rights. This removes the current 26-week and one-year qualifying periods, respectively. 
• Paid bereavement leave: The right to statutory bereavement leave will be broadened to apply to categories of employees beyond parents. 

Lower bar to collective redundancy consultation 

Under the ERB, the threshold for triggering collective redundancy consultation and notification will be adjusted. Currently, an employer must engage in consultation if it proposes to dismiss 20 or more employees as redundant at a single establishment within a 90-day period. The proposed reform removes the requirement for the 20 or more proposed dismissals to be made at "one establishment" such that redundancies across an entire organisation must be considered together to determine whether the consultation threshold has been met.

Changes to the Flexible Working Regime

The ERB proposes to alter the legal framework for flexible working requests, making it harder for employers to reject them. Under the ERB employers can refuse a flexible working request only if they have a reasonable basis for doing so. Employers will be required to state the statutory ground(s) for their refusal and explain why their decision to refuse the request on such ground(s) is reasonable. 

Duty to protect employees from third party harassment

Employers will be required to take all reasonable steps to prevent the harassment of employees. Note that unlike the new duty introduced in October 2024 (see below) this is not limited to sexual harassment and requires employers to take “all reasonable steps” rather than only “reasonable steps”.

Guaranteed hours for zero-hours workers 

The ERB introduces measures to address “one-sided flexibility” in zero-hour contracts. Workers will have the right to:

• a guaranteed hours contract if they work regular hours over a defined period;
• reasonable notice of shifts; and
• compensation for last-minute cancellations or shift changes.

Details of how these measures will work in practice are to be determined.

Employer’s duty to prevent sexual harassment

Since 26 October 2024, employers have been subject to a new duty to prevent the sexual harassment of their employees. Employers must ensure they keep on top of this duty throughout 2025, for example by updating risk assessments and providing regular training. Employers may begin to see the impact of the reform this year as employees seek to raise potential breaches during employment disputes. 

Fire and Rehire Code of Practice

From 20 January 2025, the controversial practice of "fire and rehire" through which employers dismiss employees and offer re-engagement on less favourable terms, will be subject to stricter scrutiny under the new statutory code of practice on dismissal and re-engagement (the “Code”). While the Code does not outlaw the practice, it introduces more robust guidelines to promote fairness and transparency, with financial consequences for non-compliance.

Tribunals will have the power to punish employers found to have unreasonably failed to comply with the Code by increasing relevant tribunal awards by up to 25%.

Changes to employer national insurance contributions

Significant changes to employer National Insurance Contributions (“NICs”) will take effect from 6 April 2025, introducing higher rates and a reduced threshold for contributions.

The primary rate of NICs, which employers pay on employees' earnings, will rise from 13.8% to 15% and the earnings threshold at which employers start paying NICs will drop from £9,100 to £5,000 per year. 

New right to neonatal care leave and pay

Eligible parents of babies who, within the first 28 days of birth, require at least seven days of specialist neonatal care will be eligible for up to 12 weeks of statutory neonatal care leave and pay (in addition to existing statutory entitlements such as maternity leave, paternity leave, and shared parental leave). This will be a "day one" right. . 

FCA rules on non-financial misconduct

The FCA is due to publish its rules on non-financial misconduct (which includes, for example, acts of bullying, harassment and discrimination) in the first part of this year. The new framework will clarify the regulator’s expectations of how firms should address acts of non-financial misconduct. Together with the new duty to prevent sexual harassment, these rules will encourage firms to take a more robust approach to tackling non-financial misconduct.

Case law developments 

Finally, there are a few headline cases to watch out for in 2025 concerning the expression of protected beliefs at work: 

• Mrs K Higgs v Farmor’s School - A pastoral administrator was dismissed after posting Facebook content critical of sex education in schools, which she believed threatened fundamental Christian values by normalising same-sex relationships and gender fluidity. She alleged discrimination and harassment based on her protected beliefs under the Equality Act. The Employment Appeal Tribunal remitted her case to the Court of Appeal and it was heard in October 2024. A decision is expected in 2025. 
• David Miller v University of Bristol - Dr Miller, a former Professor of Political Sociology, was dismissed for gross misconduct following the expression of his anti-Zionist views and use of anti-Semitic language. The Employment Tribunal found that his beliefs met the criteria for a philosophical belief under the Equality Act and Dr Miller’s claims for unfair dismissal and direct discrimination succeeded. The University’s appeal is due to be heard by the EAT by November 2025.