Employment law: What’s on the horizon for 2025?

2025 promises to see big changes to the employment law landscape. Important developments are expected in areas such as artificial intelligence, data protection, equality, neonatal care and workers’ rights.

We have provided a summary of the key changes businesses should expect over the next 12 months.  

The Neonatal Care (Leave and Pay) Act 2023

To support parents of babies needing specialised care, the Neonatal Care Leave and Pay Act 2023 received Royal Assent in May 2023, and it is expected to come into force in April 2025. 

The new law will introduce a statutory right to up to 12 weeks paid leave for parents of babies requiring neonatal care. This entitlement will be in addition to the other types of family leave like maternity, paternity and shared parental leave. 

Like maternity leave and pay, neonatal care leave will be a right from day one of their employment. However, statutory neonatal care pay is subject to having at least 26 weeks of continuous service as at the relevant week, and an average weekly earnings over the lower earnings threshold (which is currently £123 a week, but will increase to £125 a week in April 2025). 

The Equality (Race and Disability) Bill

A significant development to look out for in 2025 is the publication of the Draft Equality, Race, and Disability Bill. This bill will introduce two key changes:

1. Expanding equal pay laws to ethnic minorities and disabled people. This expansion will likely result (at least initially) in an increase in grievances and Employment Tribunal claims, and employers should consider reviewing their pay practices now in preparation for the Bill becoming law.
    
2. In an expansion of the obligation to report on gender pay gap, employers with 250 or more employees will also be required to publish information on their ethnicity and disability pay gaps.    

Increase in Tribunal awards for a failure to follow code of practice on dismissal and re-engagement

In July 2024 the Government introduced a new statutory code that employers have to follow where they are considering implementing changes to employees’ contract of employment  through dismissal and re-engagement (more commonly known as ‘fire and rehire’). 

The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 will come into effect on 20 January 2025. This will give Employment Tribunals the power to increase awards by up to 25% where there have been breaches in the obligation to collectively consult and the employer has failed to follow the statutory code on dismissal and re-engagement.

Statutory Code on the right to disconnect

A consultation on a new Statutory Code of Practice on the right to disconnect is expected in 2025. Whilst this was conspicuously absent from the Employment Rights Bill, the Government’s intention is for this code to provide employees with the ability to switch off from work when outside of their working hours, meaning that they cannot be expected to read / respond to emails or answer work calls.

Artificial Intelligence (AI) in the Workplace

On 7 January 2025 the Government announced its plan to use AI in a bid to improve productivity and boost economic growth. AI is already used by the NHS to diagnose medical conditions, and the Government has identified the wider public sector as somewhere where AI can improve service delivery. AI’s use in the private sector is even more widespread.  

With this increased AI accessibility comes the need for employers to effectively manage AI-related risks, such as data privacy, surveillance, and potential biases in decision-making. In its ‘Next Steps to Make Work Pay’ paper on 10 October 2024, the Government promises a consultation on surveillance technologies, and it plans to negotiate with trade unions and staff representatives on the issue.

The Employment Rights Bill

The Employment Rights Bill will introduce significant changes to the workplace that are designed to improve workers’ rights. A breakdown of the key aspects from the Employment Rights Bill can be found in our recent blog on the topic.

Throughout 2025 the Government will launch a series of consultations on the Bill. As they do, important missing details behind the proposed changes will finally begin to emerge. This will be crucial information for businesses in helping them plan for the Bill becoming law in Autumn 2026.

Data Protection

Data protection laws will continue to evolve in 2025, particularly as AI and surveillance technologies become more prominent in the workplace. 

To ensure that personal data is handled appropriately and transparently, the Government and Information Commissioner’s Office are expected to issue further guidance on data protection relating to AI applications in recruitment, performance monitoring, and surveillance. 

Increase in statutory rates of pay

As with every year, the different statutory rates of pay are expected to increase in April 2025.

The national living wage/minimum wage will see a sizeable increase on 6 April 2025: 

• for individuals aged 21 and over, the rate will increase to £12.21 (an increase of 6.7%);
• for individuals aged 18-20, the rate will increase to £10.00 (an increase of 16.3%); and
• for 16-17 year olds, the rate will increase to £7.55 (an increase of 18%)

The statutory rate of maternity, paternity, adoption, shared parental and bereavement pay will increase to £187.18 a week. Statutory sick pay will increase to £118.75 a week.

If you require further guidance on any employment law changes in 2025, please contact a member of our Employment Team.