Looking back at 2024 and ahead to 2025: Key employment law changes 

On 4 July 2024, following the UK General Election, the Labour Party swept to power with a mandate that looks set to re-shape the landscape of employment law over the coming years, promising the biggest changes to employment law in a generation. We explored the employment legislation most likely to be impacted by this election which you can find here.

On 10 October 2024, the hotly anticipated draft Employment Rights Bill was introduced by the new Labour Government. The Bill contains wide-ranging changes, including in relation to unfair dismissal, fire and rehire, zero hours and low hours contracts, trade unions and industrial action, sexual harassment and third-party harassment, statutory sick pay, flexible working, and family leave.

Karen Bates, Head of Employment at Foot Anstey, sets out the key practical steps that employers can take to prepare for these changes in our webinar here.

Just weeks after announcing the draft Employment Rights Bill (30 October 2024), the Labour Government also published its Autumn Budget. A number of changes impacting employers were announced within that Budget and some of these are covered below in the issues to look out for in 2025.

The main headline for employers was the Government’s plans to increase employer’s National Insurance rates from 13.8% to 15%. Furthermore, employers will start paying the rate on salaries of £5,000 per year, down from £9,100. While the Chancellor hopes that this will increase funding for public services, several employers are concerned that it has come at a time when businesses are already under significant financial strain and pressure and the changes could lead to redundancies or reduced hiring.

Moreover, the Budget confirmed the Labour Government’s intention that, where responsibility for accounting for tax and NICs is provided through an umbrella company employer, this responsibility would be transferred to the agency that supplies the worker to the end-client. Where there is no agency in the labour supply chain, responsibility will move to the end-. This will be implemented by the Finance Bill 2025 and is expected to take effect from 6 April 2026. Employers affected should therefore consider taking steps now to prepare for this change.

From 1 April 2025 the National Living Wage (NLW) will increase to £12.21 for workers (aged 21 and over) in the UK.

The new rates, applying from 1 April 2025, are as follows:

• National Living Wage (21 and over): £12.21 (6.7% increase)
• 18 – 20-Year-Old: £10.00 (16.3% increase)
• 16 – 17-Year-Old: £7.55 (18% increase)
• Apprentice Rate: £7.55 (18% increase)
• Accommodation Offset: £10.66 (6.7% increase)

Action points:

1. Employers should conduct a review of the pay of their workers to ensure that workers are being paid the applicable rates when they come into force.
2. Employers should factor in these increases to their planning for the upcoming financial year.

On 20 January 2025, the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 (SI 1272/2024) came into force.

This gives tribunals the power to increase or reduce compensation by up to 25% for failure to comply with collective consultation obligations under the Code of practice on dismissal and re-engagement.

Action Points:

1. Carefully consider and ensure compliance with the Code of Practice on Dismissal and Re-engagement.
2. This will include engaging in meaningful consultation; to consult for as long as reasonably possible, in good faith, with a view to reaching an agreed outcome.
3. Consider treating dismissal and re-engagement as a last resort.

The Public Bill Committee is currently reporting to the House of Commons on the Employment Rights Bill as it makes progress through Parliament. As above, this will bring changes across employment law and we will be carefully monitoring the Bill’s development.

You can track its progress here.

Action Points:

1. It is advisable to monitor and keep up to date with developments on the Bill (or ask us about this) so you can prepare for the incoming changes.
2. Take steps to prepare for these changes on the horizon. We can give you guidance on the steps you could be taking now to ensure your business is ready.

On 6 April 2025, The Neonatal Care (Leave and Pay) Act 2023 is expected to come into force having received Royal Assent on 24 May 2023.

The Act introduces provisions to enable parents whose babies require specialist care after birth to take additional paid time off work up to 12 weeks at the statutory rate of pay, on top of other leave entitlements like maternity and paternity leave.

Neonatal care leave will be a day-one right and apply to parents of babies admitted to hospital up to the age of 28 days and stay in hospital for seven full days continuously or more.

Action Points:

1. Existing policies should be reviewed and updated to cover the rules relating to this new leave and pay.
2. This new right will also need to be cross referenced in other relevant family-leave policies.
3. Consider whether you will enhance pay for leave of this kind.

In March 2025, the Director of Labour Market Enforcement’s (DLME) strategy for 2025/26 is due to be submitted to the Government following the Government’s announcement on 24 September 2024 that it plans to replace the existing apprenticeship levy with a new growth and skills .

Under the existing apprenticeship levy, funds are strictly allocated to apprenticeship programs which must last at least 12 months. The growth and skills levy, however, will focus on funding apprenticeships and training for those at the beginning of their careers. It will also expand the levy to cover other technical qualifications and apprenticeships shorter than 12 months.

Action Points:

1. Review your apprenticeship agreements and, where necessary, update future agreements and any relevant existing policies to refer to the new growth and skills levy.
2. Consider your existing arrangements and how this will apply in practice for your business.