23.01.2025

2024 saw a new Labour Government move into Downing Street, swiftly followed by the publication of the Employment Rights Bill – marking a significant step towards implementation of the extensive legal reforms Labour set out in its ‘Plan to Make Work Pay: Delivering A New Deal for Working People’. 

Below, we look at what lies in store for 2025 and beyond.

Employment Rights Bill – key points you need to know

The Employment Rights Bill incorporates significant and wide-ranging employment law reforms, including changes on matters such as unfair dismissal, changing terms, unpredictable hours contracts, flexible working, equality at work and harassment, trade union rights, family leave, sick pay and redundancy.

On 10 October 2024, when the Bill was introduced to Parliament, the Government also published a document, ‘Next Steps to Make Work Pay', which sets out the Government’s vision and objectives for Make Work Pay, details the provisions of the new Bill, and outlines the additional wider reforms that the Government plans to deliver in due course.  For further details about the Government’s plans, see here.

It will take some time for the Bill to progress through Parliament and in fact it is likely there will be only limited changes to the law in 2025. There will, however, be plenty of consultations, which will reveal exactly how the Government intends to implement these reforms.  There have already been four consultations on various issues: strengthening remedies against abuse of rules on collective redundancies and fire and rehire; industrial relations issues; applying zero hours contracts measures to agency workers; and Statutory Sick Pay.

Make UK’s engagement with Government on the new legislation has been wide-ranging. In particular, we welcome the fact that the Government has announced that reforms to unfair dismissal will not come into effect any sooner than Autumn 2026, and until then the current qualifying period will continue to apply. This indicates that Government has listened to our concerns about taking time to get the detail right and avoiding unintended consequences, whilst giving businesses enough time to prepare for the changes to come into effect.

Make UK members can be assured that we will maintain our in depth and constructive dialogue with Government on the measures in the Bill, and will continue to respond to consultations as well as on the other proposed changes to employment law, ensuring that their views are heard.

Legislative developments in 2025 

Holiday pay: Employers with holiday years starting on 1 January 2025 will be subject to the new laws on holiday entitlement and pay (brought in on 1 January 2024) for the first time. These laws apply to holiday years starting on or after 1 April 2024 and include major changes to the way holidays and pay are calculated for part-year workers and workers with irregular hours (including zero hours workers). For more details of the holiday pay changes, please see our HR & Legal Resources.

Changes to protective awards: From 20 January 2025, employment tribunals have the power to increase or reduce any protective award by up to 25% for any unreasonable failure to comply with the statutory Code of Practice on Dismissal and Re-engagement.

The Neonatal Care (Leave and Pay) Act 2023 will come into force on 6 April 2025. This will introduce an entitlement for eligible employees to receive up to 12 weeks’ paid leave to care for a child receiving neonatal care (in addition to other statutory family leave). The Act will apply to parents of babies who are admitted into neonatal care up to 28 days old and who have a continuous hospital stay of at least seven full days. This is due to be a day one right. A template policy will be available to members in our HR & Legal Resources after the regulations have been approved by Parliament.

New minimum and living wage rates: Annual changes to statutory rates are due to be in force from 1 April 2025:

  • The National Living Wage (which is the minimum hourly rate of pay which must be paid to workers aged 21 and over) will increase from £11.44 to £12.21. 
  • The National Minimum Wage  rate for 18-20 year olds will rise from £8.60 to £10.00, and the rate for 16-17 year olds and certain apprentices will increase from £6.40 to £7.55. See our December FAQs for more  details.

New statutory, tax and NI rates: From 6 April 2025, statutory sick pay, family leave pay and a number of tax and National Insurance contribution (NIC) changes will come into effect including: 

  • Statutory sick pay will increase from £116.75 to £118.75 per week.
  • Statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay will increase from £184.03 to £187.18 per week.
  • The lower earnings limit will increase from £123 to £125. The threshold for maternity allowance will remain at £30 a week.
  • Employer NICs will increase from 13.8% to 15%.
  • The Secondary Threshold (which is the salary level at which employers are liable to pay NICs) will reduce from £9,100 per year to £5,000 per year until 6 April 2028. After that it will increase by CPI.

Developments to look out for in 2025

The Equality (Race and Disability) Bill is likely to be published in 2025.  The purpose of this Bill is to bring about equal pay for disabled people and ethnic minorities. It will do this by making it easier for people in these groups to bring equal pay claims, and by introducing ethnicity and disability pay reporting. The aim is to use this reporting to close ethnicity and disability pay gaps, in the same way that gender pay gap reporting is intended to reduce unequal pay between men and women. It is likely that measures similar to the existing gender pay gap reporting ones will be introduced, and it is currently expected that those measures will apply to organisations employing at least 250 employees. It is unclear whether the Bill will cover some of the Government’s other commitments around equal pay. 

The Paternity Leave (Bereavement) Act 2024 will give fathers and partners additional paternity leave rights if the mother of a child (or adoptive/intended parent for adoption or surrogacy) dies soon after the birth. Further details will be available when the Government publishes regulations to bring the Act into force, although as yet there is no date for this.  A template policy will be available to members in our HR & Legal Resources as soon as we have the full details of this new right.

Trade unions and industrial action: Labour’s Plan to Make Work Pay proposed a number of changes to trade union law. These include simplifying the statutory recognition process, giving unions a right to access workplaces, and providing time for union representatives to perform their roles. We do not currently have any dates for these reforms, but they are likely to be subject to various consultations. 

Further consultations: We anticipate draft regulations and consultations on various topics (although we do not at present have any likely dates) including:

  • A day one right to at least one week of bereavement leave for employees with a qualifying relationship with the deceased
  • Stronger rights to flexible working
  • A potential new right for employees to raise collective grievances 
  • A requirement for employers with at least 250 employees to produce menopause action plans
  • Extending time limits for employment tribunal claims
  • Restrictions on employers’ ability to use fire and rehire to change employment terms, including making dismissals automatically unfair 
  • A requirement for employers proposing 20 or more ‘redundancies’ to count relevant dismissals across all sites/workplaces and not just “at one establishment” 
  • Increasing the minimum collective consultation period in respect of large-scale redundancies
  • The right to disconnect (i.e. workers’ right to switch off from work outside of working hours and not be contacted by their employer)
  • A potential new single status of ‘worker’ (i.e. removing the distinction between worker and employee)
  • A requirement for employers with at least 250 employees to publish ‘equality action plans’, including gender pay gap action plans. 

A review of the current complex family leave system is also likely to take place by July 2025.

Sexual harassment at work: The requirement for employers to take reasonable steps to prevent sexual harassment at work, which came into force from 26 October 2024, will at some point, under the Employment Rights Bill, be expanded to include “all reasonable steps” and regulations will be needed to set out what such steps would be.  In addition, the Bill introduces employer liability for third party harassment (all types of harassment, not just sexual harassment) and it is currently unclear what additional consultation there will be on this measure.

How we can help

Make UK’s Policy Team has been engaging closely with Government, trade unions and other representatives discussing the detail of the Government’s Plan to Make Work Pay to ensure that the Government’s proposals benefit both manufacturing employers and their workers. We will continue to represent the views of Make UK members to Government, sharing member insights, suggestions, and concerns via meetings, roundtables, and during the upcoming consultations.

In the meantime, if you are a Make UK subscriber, our legal experts will keep you updated on key points that arise over the coming weeks and months. You can also speak to your regular adviser with any queries you may have about these various employment law proposals and to request further consultancy support. Make UK subscribers can access guidance on a wide range of employment law topics including template policies and drafting guidance in the HR & Legal Resources section of our website, which will be updated as and when new measures are finalised and implemented.

If you are not a Make UK subscriber, you can contact us for further support. Please click here for information on how we can help your business.