Employment Law 2025: key updates and what you need to know

As we move into 2025, the landscape of employment law in the UK continues to evolve. For employers, employees, and legal professionals, staying informed on these developments is crucial to effectively navigate the increasingly complex legal environment. This blog explores the key updates in UK employment law for 2025 and what they mean for both employers and individuals.

Employment Rights Bill (ERB)

We have previously discussed the ERB and potential reforms in detail in our earlier blogs (New Employment Rights Bill – Labour’s plans for employment law and Further insights into the Employment Rights Bill).

At the end of last year, the Government sought feedback on various aspects of the ERB and we expect further consultations in 2025. The ERB must also undergo scrutiny in Parliament, where proposed amendments will be considered. The ERB is expected to be passed into law no earlier than summer 2025, although many of the reforms will likely not take effect until 2026.

As a reminder, some of the most significant provisions of the new ERB include:

• "Day one" right against unfair dismissal: One of the most notable changes is the introduction of a "day one" right for employees to challenge unfair dismissal without needing a qualifying period. Although this marks a substantial shift for employers, it will not be implemented immediately. The Government has made it clear that “reforms of unfair dismissal will take effect no sooner than autumn 2026” to allow time for detailed rules to be established and for employers to prepare. Until then, the current two-year qualifying period will remain in place.
• Restrictions on "Fire and Rehire": The ERB proposes a significant reform in how employers handle contract variations through the practice of "fire and rehire". Specifically, it will be deemed automatically unfair to dismiss an employee for the following reasons: (1) if an employer sought to vary the contract without the employee’s consent, or (2) if an employer re-engages an employee or hires someone else under a new contract to perform substantially the same duties.
• Harassment: We have previously written about the new duty for employers to take reasonable steps to prevent sexual harassment in the workplace, which came into effect in October 2024 (Final EHRC guidance on preventing sexual harassment at work). The ERB introduces further changes to workplace harassment laws. Employers will be required to take all reasonable steps to prevent sexual harassment. The ERB will also introduce liability for third party harassment on employers in respect of all types of harassment. Additionally, disclosures about sexual harassment will be classified as “protected disclosures”, granting those who report protection under the whistleblowing regime.
• Restrictions on zero-hours contracts: The ERB proposes limits on zero-hours contracts. Employers will be required to offer guaranteed hours to zero-hours workers and workers who are on “low” guaranteed hours but regularly work beyond them. Additionally, workers will be compensated for shifts that are cancelled or end early.
• Other day one rights: Beyond unfair dismissal, the ERB introduces a variety of other "day one" rights, including an extended rights to statutory sick pay, unpaid parental leave and paternity leave, a new statutory right to paid bereavement leave, and enhanced maternity protection.
• Changes to flexible working: The ERB outlines new provisions for flexible working, meaning employers can only refuse requests if they have a “reasonable” basis to do so. Additionally, employers must state the specific ground(s) for refusal and explain why the refusal is reasonable.

The Draft Equality (Race and Disability) Bill

The Government proposes to introduce a new Equality (Race and Disability) Bill on pay gap reporting and equal pay rights in relation to disability.

Key elements include:

• Pay gap reporting: The Bill will extend pay gap reporting obligations to include ethnicity and disability for employers with more than 250 employees.
• Outsourcing and equal pay: Additionally, measures will be introduced to ensure equal pay rights protect workers discriminated against based on race or disability. Employers will be prohibited from using outsourcing services to circumvent equal pay obligations.

Further details on these proposals are available in our previous blog: The King’s Speech: Employment Rights Bill.

The Government is expected to begin consulting on this legislation soon, with a draft Bill anticipated during this parliamentary session (by spring 2025). Similar to the ERB, this Bill will need to be debated by Parliament before becoming law. Therefore, it is unlikely that reforms proposed in the Equality Bill will take effect in 2025.

Neonatal Leave and Pay

The Neonatal Care (Leave and Pay) Act 2023 grants parents the right to 12 weeks’ leave and pay if their baby requires neonatal care, in addition to existing parental leave entitlements. However, the implementation of these new entitlements depends on regulations, which are yet to be published. The timeline for implementation remains unclear but it could take place as early as April 2025.

Creating a single status of worker

The Government has promised a consultation on developing a simpler framework for employment status, including the introduction of a single “worker” status differentiated from genuine self-employment.

A legal right to switch off/disconnect

The Government is likely to move forward this year with the right to switch off through a statutory Code of Practice. However, any proposals will undergo consultation before implementation.

Case Law Developments

This year, one of the key areas to watch will be discrimination cases based on religion and belief. Two headline cases include:

• Higgs v Farmor’s School: A Christian school assistant, who posted views on LGBT+ relationships on her private Facebook profile, was dismissed after a complaint. The Employment Tribunal dismissed her discrimination claim, and the case was heard in Court of Appeal in October 2024. The Court of Appeal heard submissions from organisations including the Equality & Human Rights Commission, Sex Matters, and the Church of England Archbishop’s Council. This case is likely to set a precedent for future cases relating to the right to express gender-critical views and beliefs related to other protected rights in the workplace. We are awaiting the decision, which is expected at some point in 2025.
• Miller v University of Bristol: In February 2024, an employment tribunal held that an academic's anti-Zionist beliefs qualified as a protected philosophical belief under the Equality Act 2010 and that his summary dismissal was an act of direct discrimination and unfair. The case is due to be heard by the EAT by November 2025 and again could provide guidance on future cases concerning expression of protected beliefs at work.

Conclusion

The next few years are set to bring transformative changes to UK employment law. While significant reforms are expected to take place in 2026, 2025 will mark a pivotal year with the passage of the Employment Rights Bill and the initiation of consultations shaping the future of employment law. We will be closely following these developments and will continue to keep you updated.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, January 2025