10 Employment Law Updates Business Leaders Should Expect in 2025

Prior to the Labour Party winning the July 2024 General Election it set out a number of priorities that an incoming Labour Government would have to change employment laws, which the Government is currently implementing in the Employment Rights Bill.

Chris Hadrill, Partner at Redmans Solicitors, highlights 10 changes which could be most consequential for business in 2025 and beyond.

Fire and Rehire Practices Will Face Scrutiny

The practice of dismissing and re-engaging an employee has been talked about quite often in the recent employment law landscape. To curb malpractice, the Government is introducing specific provisions in the Employment Rights Bill on “fire and rehire”.

These provisions will make it automatically unfair to dismiss an employee if the reason, or the principal reason, for dismissal is if they don’t agree to a contract change.

Day One Unfair Dismissal Rights

In possibly the most significant change in motion, from 2026 the basic right of protection against unfair dismissal will apply from ‘day one’ of an employee’s employment. Business leaders should make note that employees will no longer need mandatory two years of service to make an unfair dismissal claim.

Improved Protections for Self-Employed

Under Labour’s proposals, the self-employed would have rights such as the right to withdraw labour due to health and safety issues, greater protection against blacklisting, and the right to a written contract. Moreover, they will likely have a health and safety representative at work as well as new policies aimed at tackling late payments.

Since these changes are likely to alter policies, contracts, and payment plans, business leaders should stay updated – particularly those dealing with freelancers, contractors or gig workers.

Possible Changes to Employment Status

In addition to rights for the self-employed, a number of commitments have been made to give individuals with “worker” status as well. Labour intends to extend the same rights and protections as employees are offered to “workers”, including rights to sick pay, holiday pay, parental leave, and protection against unfair dismissal).

This comes alongside Labour’s promise to shift from a ‘three-tier’ employment status framework (contractor, worker, and employed) to a ‘two-tier’ framework (worker and employed).

Family-Friendly Leave Offered Since ‘Day One’

Under the Employment Rights Bill certain rights will become available to employees on ‘day one’, rather than after the current qualifying period. These rights include parental leave, paternity leave and maternity leave. In addition, bereavement leave would also be extended to unpaid workers.

To ensure compliance and avoid legal trouble, businesses are advised to review policies and stay updated with changing legislation

Dismissal Protection May Be Strengthened for Pregnant Employees and Parents on Leave

The protections afforded to pregnant women and employees taking periods of maternity or paternity leave will be strengthened. One of the suggestions being made is to extend the current protection, that protects women on maternity leave from being made redundant, to dismissals for all other reasons.

The Government has also stated that it legislates to make it unlawful for employees, who have been pregnant, to be dismissed within six months of their returning to work – barring limited circumstances.

It is also intended that the provisions of the Employment Rights Act 1996 which cover the various types of statutory family leave will also be amended to protect employees from dismissal, for a period of time, after the leave ends.

National Minimum Wage to Match Living Wage

The Labour Government intends to increase the National Minimum wage with the purpose of making it a living wage that people can live on. This would involve removing the age bands for adult workers, amending the approach to increasing the National Minimum Wage so that it takes inflation into account, and empowering the HMRC to enforce the National Minimum Wage.

Business leaders shouldn’t just update and prepare themselves for these changes, but also properly train their HR and payroll staff.

Employer Sexual harassment Prevention Duty

Another key legislation introduced under the Employment Rights Bill is the duty that requires employers to take all reasonable steps to prevent sexual harassment of their employees. It has also been suggested that the legislation would be amended to protect interns and volunteers from sexual harassment.

The Government has also previously evinced an intention to give women who report sexual harassment at work the same protection as other types of whistle blowers. Although currently, the Employment Rights Bill does not cover this.

However, the Employment Minister, Justin Madders, has stated in Parliament that the Government is reviewing the use of NDAs in cases of sexual harassment. Business leader should make note as there may be alterations made to settlement agreements in the future.

Businesses to Reasonably Prevent Third-Party Harassment

The sections of the Equality Act 2010 which covered third-party harassment were repealed in 2013 by the previous Conservative Government. However, clause 18 of the Employment Rights Bill will re-introduce employer liability for third-party harassment.

This means that employers must take all reasonable steps to prevent a third party from harassing an employee, in the course of their employment.

Stricter Rules for Employment Tribunal Claims

Compliance with employment law will be paramount now more than ever, as a number of commitments have previously been made by Labour in relation to Employment Tribunal claims. Business leaders may see an increase in penalties for employers breaching Employment Tribunal orders, caps on compensation for employers breaching employment laws would be removed (like the statutory cap on compensation in an unfair dismissal claim).

Moreover, the time limit for making a claim in the Employment Tribunal would be increased from three months to six months.

Conclusion

The Labour Government has indicated a strong commitment to worker and employee rights. However, despite political pressure, it seems intent on passing this legislation in 2025 (though some of the changes will be delayed until 2026).

Employers and employment lawyers should watch this space and review current policies, as the employment law landscape is likely to change dramatically in 2025 and beyond.