Looking Ahead: Employment Law in 2025

On 20th January 2025, Employment Tribunals will be able to impose a 25% uplift in compensation where an employer unreasonably fails to follow the Code of Practice on fire and rehire.

Further reforms to the practice of fire and rehire are expected under the Employment Rights Bill, but a code of practice was introduced in July 2024, breaches of which could see further financial penalties for employers.

Fire and rehire refers to circumstances where the employer must make changes to the existing contracts of employment for a genuine and essential business need.

Several key obligations under the code of practice were introduced which are summarised below:

1. Consultation and Re-Examination

The requirement to consult with the workforce prior to implementing any changes to working practices affecting terms and conditions of employment is something employers should always adhere to.

The code of practice provides a requirement for employers to consult ‘for as long as reasonably possible.’ This means that even if the employer knows the employees and their representatives are unlikely to agree to the changes, they remain obligated to consult in good faith with the aim of reaching an agreement. The employer should carefully consider all feedback, objections and alternative proposals; this includes re-examining their proposals if the proposed changes are not agreed upon.

Consultations should involve trade unions (where there is a recognised trade union), employee representatives elected to take part in consultation on behalf of the workforce, or individual employees.

2. Coercion And ‘Threats’ of Dismissal

Where an employer is seeking agreement to vary terms and conditions of employment, the possibility of failing to reach agreement may be dismissal and re-engagement. It is important that employers are open about this if negotiations are genuinely not leading to an agreeable outcome, but employers should not use the threat of dismissal as a negotiating tactic.

To do so is not in the spirit of good faith negotiations and could run the risk that employers are seen to be placing undue pressure on their workforce or coercing them into accepting terms that are less favourable.

3. A Last Resort

It has always been expected that employers will act reasonably and only impose essential changes to terms and conditions of employment, but where the employer has not been able to reach an agreement, has re-examined the proposals, and decides to implement the changes, they are not prohibited from doing so, but the employer must be able to show that imposing the change is a last resort.

With effect from April 2025, the below rates will increase as follows:

• Statutory Sick Pay (SSP) – £118.75 per week
• Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (ShPP) and Statutory Parental Bereavement Pay (SPBP) – £187.18 per week.
• The lower earnings limit (the amount someone must earn to be entitled to these payments) will increase to 125 per week.

In April 2025, the minimum wage rates across the UK will increase, with the 18–20-year-old wage bracket rising by 16.3%.

Effective from 1st April 2025, the new rates will be as follows:

• Age 21 and over = £12.21 per hour (£11.44 previously)
• Age 18 to 20 = £10 per hour (£8.60 previously)
• Under 18’s and Apprentice rate = £7.55 per hour (£6.40 previously)

Expected to come into effect in April 2025 (subject to confirmation), the Neonatal Care (Leave and Pay) Act will introduce a new statutory leave entitlement for parents of babies admitted to hospital within their first 28 days of life.

Eligible employees with parental responsibility will be entitled to 1 to 12 weeks of paid leave. Specific rates of pay, eligibility criteria, and the exact duration of entitlement will be confirmed in due course. Neonatal Care Leave and Pay will be provided in addition to existing leave entitlements, such as maternity, paternity, and shared parental leave.

It is not yet known when this legislation will be introduced, but as it was given Royal Assent last year. It is anticipated to come into effect in 2025.

The Paternity Leave (Bereavement) Act will mean that bereaved fathers or non-birthing partners will receive paternity leave in the event the mother, or a person with whom a child is placed or expected to be placed for adoption, dies.

This move was proposed by Chris Elmore MP after a constituent discovered he did not qualify for shared parental leave when his wife died during childbirth.

Currently, paternity leave requires 26 weeks of service for an employee to be eligible, whereas there is no qualifying service required for maternity leave. For more information on Paternity Leave, please see our previous guide here:

For more information on time off due to bereavement please see our guide here: https://www.avensure.com/articles/bereavement-leave-guide-for-employers-faqs-and-uk-laws/

This Bill will introduce the right for ethnic minorities and persons with disabilities to bring equal pay claims.

Currently, equal pay is set out in the Equality Act, which stipulates that males and females performing the same work should receive ‘equal pay for equal work’. This principle also applies to other benefits, such as overtime rates, car allowances, sick pay, bonus payments, and pension entitlements.

This does not affect the existing right to bring claims against an employer on the grounds of discrimination if an individual suffers a detriment due to a protected characteristic under the Equality Act (race, sexual orientation, gender reassignment, marriage or civil partnership, religion or belief, sex, pregnancy and maternity, age, disability). The introduction of the Equality (Race and Disability) Bill will extend the right to bring an equal pay claim beyond the basis of sex.

The exact content of the Bill and its implementation date are unknown at this stage.

Labour’s Employment Rights Bill, in line with their manifesto commitments to make work pay by driving the labour market forward and overhauling employment rights and protections for the workforce, will introduce some of the most substantive changes to employment legislation in decades.

The Bill includes up to 28 employment reforms, with many changes likely to spark significant discussion. One key reform, the removal of the minimum qualifying service required to claim unfair dismissal, will mean that employees can pursue an unfair dismissal claim from ‘day 1’ of employment. While this reform is expected to be a major point of debate, it is unlikely to be introduced until 2026.

Additional entitlements under consultation ahead of implementation include the removal of the 3-day waiting period before statutory sick pay (SSP) becomes payable. This means that instead of being payable only after an employee has been absent for more than 3 days, SSP will be available for shorter periods of sickness absence. The lower earnings limit for eligibility to receive SSP will also be removed.

Also becoming day 1 rights under the Bill will be the right to unpaid parental leave, paternity leave and the entitlement to paid bereavement leave.

We are also expecting further reform regarding collective redundancy, including an increase in the protective award where employers fail to consult, and additional protections for employees subject to ‘fire and rehire’ practices.

We also expect to see reform in respect of zero hours contracts, addressing the right to request guaranteed hours and reasonable notice of shifts, plus payment where shifts are cancelled at short notice.

Avensure will provide you with regular updates as the consultation progresses throughout the year.

And finally…. we wish all our clients a peaceful festive period and all the very best for 2025.