Employment Law Update: Key Changes from the Employment Rights Bill and Autumn Budget - For Employers
5 February 2025 | Business & Workplace |
At Fishers Solicitors, we strive to keep our clients informed about the latest legal developments. The recent publication of the Employment Rights Bill on 10th October 2024, along with key announcements in the Autumn Budget, introduces significant changes to employment law. While these changes hold the potential to reshape workplace rights and responsibilities, they must first pass through both Houses of Parliament before becoming law. Extensive consultations are set to begin in 2025, with implementation likely starting no earlier than 2026. In this blog, we provide a concise summary of the key updates and their implications for both employers and employees.
National Minimum and Living Wage Increases
Effective 1 April 2025, the National Minimum and Living Wage rates will see substantial increases:
- 21 and Over (National Living Wage): Up by £0.77 per hour (6.7%) from £11.44 to £12.21.
- 18–20-Year-Olds: A significant rise of £1.40 per hour (16.3%) from £8.60 to £10.00.
- 16–17-Year-Olds & Apprentices: Both categories will see an 18% increase, moving from £6.40 to £7.55 per hour.
- Accommodation Offset: Daily rate increases by £0.67 to £10.66.
Day-One Employment Rights
The Bill introduces a host of new rights available from the first day of employment, including:
- Unfair dismissal claims.
- Statutory Sick Pay (SSP).
- Unpaid parental leave, paternity leave, and extended bereavement leave now encompass general bereavement beyond parental circumstances.
Unfair Dismissal Protections
The government is committed to consulting on various aspects of implementing unfair dismissal reforms, including the proposal to revoke the two-year continuous service requirement for bringing an unfair dismissal claim. However, probationary periods (proposed to last up to nine months) will still allow for an abridged dismissal process, subject to consultation. Key points include:
- Employers may dismiss during probation using a "light-touch" process.
- Lower compensation rates for dismissals during probation may apply.
- Enhanced protections against dismissing pregnant employees or those recently on maternity leave.
Zero-hours Contracts
The Bill addresses "exploitative" zero-hours contracts by mandating:
- Guaranteed-hours contracts based on a 12-week reference period.
- Compensation for early shift cancellations or adjustments.
Employees may still opt for zero-hours contracts if desired.
Flexible Working
The day-one right to request flexible working remains, with an added reasonableness test for employer refusals.
Parental and Bereavement Pay Updates
From 6 April 2025, statutory pay rates will increase:
- Maternity, Paternity, Shared Parental, and Adoption Pay: Maximum rate increases from £184.03 to £187.18 per week.
- Parental Bereavement Pay: Aligns with the above rates.
Statutory Sick Pay Changes
- Eligibility: SSP becomes a day-one right, with the earnings threshold reduced to £125 per week.
- Rate Increase: SSP rises from £116.75 to £118.75 per week.
Gender Pay Gap Reporting & Menopause Support
Organisations with 250+ employees must now produce gender pay gap action plans and outline menopause support initiatives. Key dates include:
- Public Sector: Reporting deadline – 30 March 2025 (snapshot date: 31 March 2024).
- Private Sector: Reporting deadline – 4 April 2025 (snapshot date: 5 April 2024).
Enhanced Harassment Protections
Employers must take all reasonable steps to prevent sexual harassment, now included as a protected disclosure under whistleblowing laws. Third-party harassment protections have also been strengthened.
Looking Ahead: Key Proposals Under Review
While many provisions are set to take effect, the Government has outlined several future considerations, including:
- Right to Disconnect: Safeguarding employees' work-life balance.
- Single Status for Workers: Combining employees and workers into one category.
- Equality and Pay Gap Reporting: Extending equal pay rights and introducing disability and ethnicity pay gap reporting.
Timeline and Next Steps
Most changes will require extensive consultation beginning in 2025, with implementation anticipated no earlier than 2026. Employers should proactively review their policies and prepare for compliance with these upcoming reforms.
At Fishers Solicitors, we are here to help you navigate these changes. Contact us for tailored advice or support in updating your employment practices to remain compliant.
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