Employment law reforms on the horizon

National minimum wage increases

New National Minimum Wage limits take effect.

• The National Living Wage increases from £11.44 to £12.21 an hour
• The National Minimum Wage for 18 to 20 year olds rises from £8.60 to £10.00 an hour

The rate of employer national insurance will increase by 1.2 percentage points to 15% from 6 April 2025 and the secondary threshold (the level at which employers become liable to pay national insurance on each employee's salary) will reduce from £9,100 per year to £5,000 per year.

Increases to statutory payments

The following increases came into force in April 2025:  

• Weekly rate of SSP increased to £118.75 (up from £116.75).
• Weekly rate of statutory maternity pay, maternity allowance, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay increased to £187.18 (up from £184.30).
• The lower earnings limit (the weekly earnings threshold for qualifying for the above payments, except maternity allowance) increased to £125 (up from £123). For maternity allowance the threshold remains £30 a week.

The figures and the dates from which they will apply will be formalised in an Order which will be laid before Parliament.

April 2025: New statutory right to Neonatal leave and pay

Statutory right to neonatal leave and pay comes into force for children born on or after 6 April 2025 and who receive neonatal care within 28 days of birth for seven or more continuous days. Qualifying employees will be entitled to one week's leave for each week of neonatal care, capped at 12 weeks; the leave must be taken before the end of 68 weeks beginning with the date of the child's birth.

Qualifying employees will also be entitle to statutory neonatal leave pay in line with other statutory leave entitlements.

The new tribunal awards and statutory payments where an employee's effective date of termination falls on or after 6 April 2025 are:

• a statutory redundancy payment will increase from £700 to £719;
• the maximum compensatory award for unfair dismissal increases from £115,115 to £118,223; and
• the minimum basic award for certain unfair dismissals (including health and safety dismissals) increases from £8,533 to £8,763

Revised Vento bands

New Presidential Guidance on Employment Tribunal awards for injury to feelings confirms that for claims presented on or after 6 April 2025, the Vento bands are as follows:

• A lower band of £1,200 to £12,100 for less serious cases;
• A middle band of £12,100 to £36,400 for cases that do not merit an award in the upper band; and
• An upper band of £36,2400 to £60,700 for the most serious cases. The most exceptional cases are capable of exceeding £60,700.

Review of parental leave and pay

The government has published a review of parental leave and pay including maternity and paternity leave, parental leave, shared parental leave, adoption leave and others. 

The review is expected to report its conclusions and recommendations in January 2027 
 

Employment Rights Bill: Unfair dismissal as a day one right  consultation 

The government's Roadmap indicates that a consultation on unfair dismissal as a day one right is expected Summer/Autumn 2025. 
 

New corporate offence: Failure to prevent fraud 

This new offence will hold companies accountable for fraudulent activities caried out by associated persons for their benefit and understanding the implications and preparing for compliance is crucial. To defend the statutory claim an organisation must demonstrate that it had reasonable procedures in place to prevent fraud. Please read more here. 

Restrictions on NDAs in the context of criminal activities 

From 1 October, victims of crime will be legally permitted to make certain disclosures i.e. disclosures to prescribed people or bodies for specific purposes related to the relevant criminal conduct; an NDA which seeks to prevent a "permitted disclosure" will be void. 
 

Employment Rights Bill: Various consultations 

The government's Roadmap indicates that a number of consultations will be published in Autumn 2025 including:

• A package of trade union measures including electronic balloting and workplace balloting; simplifying trade union recognition processes; duty to inform workers of their right to join a trade union; and right of access. New rights and protections for trade union representatives will be covered by an Acas consultation.
• Fire and rehire.
• Regulation of umbrella companies.
• Bereavement leave.
• Rights for pregnant workers.
• Ending the exploitative use of zero hours contracts.
   

Draft Equality (Race & Disability) Bill: consultation response expected?

The government's consultation on the proposed draft Equality (Race & Disability) Bill closed on 10 June 2025. We are unclear when we will receive a response but the government has indicated that it is seeking to press forward with its reforms so we may receive a response sooner rather than later. 

Employment Rights Bill: Various consultations

The government's Roadmap indicates that a number of consultations will be published in Autumn 2025 including:

• A package of trade union measures including protection against detriments for taking industrial action and, blacklisting
• Tightening tipping law
• Collective redundancy
• Flexible working.
   

Employment Rights Bill: Royal Assent 

We are anticipating that the Employment Rights Bill will receive Royal Assent during 2025 as many provisions will then be introduced via regulations. The government's roadmap indicates that the following new legal rights will take effect at Royal Assent or soon afterwards: 

• Repeal of the Strikes (Minimum Service Levels) Act 2023
• Repeal of the great majority of the Trade Union Act 2016 (some provisions will be repealed via commencement order at a later date)
• Removing the 10 year ballot requirement for trade union political funds
• Simplifying industrial action notices and industrial action ballot notices
• Protections against dismissal for taking industrial action.

National minimum wage increases

New National Minimum Wage limits will be announced and which in line with the government's instructions to the Low Pay Commission will see a further closing of the gap between the National Living Wage and National Minimum Wage rate for 18 to 20 year olds.

Employment Rights Bill: Proposed reforms expected to take effect

The government's Roadmap indicates that the following reforms may take effect in April 2026

• Collective redundancy protective award – doubling the maximum period of the protective award
• Day one paternity leave and unpaid parental leave
• Whistleblowing protections
• Fair Work Agency body established
  Statutory sick pay – remove the lower earnings limit and waiting period
• Simplifying trade union recognition process
• Electronic and workplace balloting.

Gender pay gap and menopause action plans are also expected to be introduced on a voluntary basis, with a statutory requirement taking effect in 2027 (see below). 

Employment Rights Bill: Proposed reforms expected to take effect

The government's Roadmap indicates that the following reforms may take effect in October 2026:

• Fire and re-hire
• Procurement – two tier code
• Tightening tipping law
• Duty to inform workers of their right to join a trade union
• Strengthen trade unions' right of access
• Requiring employers to take "all reasonable steps" to prevent sexual harassment of their employees
• Introducing an obligation on employers not to permit the harassment of their employees by third parties
• New rights and protections for trade union reps
• Employment tribunal time limits
• Extending protections against detriments for taking industrial action.

Conclusions from review of parental leave and pay expected to be published 

Employment Rights Bill: Proposed reforms expected to take effect

The government's Roadmap indicates that the following reforms may take effect during 2027:

• Gender pay gap and menopause action plans (introduced on a voluntary basis in April 2026)
• Rights for pregnant workers
• Introducing a power to enable regulations to specify steps that are to be regarded as "reasonable" to determine whether an employer has taken all reasonable steps to prevent sexual harassment
• Blacklisting
• Industrial relations framework
• Regulation of umbrella companies
• Collective redundancy – collective consultation threshold
• Flexible working
• Bereavement leave
• Ending the exploitative use of zero hours contracts and applying ZHC measures to agency workers
• Day one right – protection from unfair dismissal.

Draft Equality (Race & Disability) Bill and gender pay gap outsourcing  

The consultation closed on 10 June 2025, however the proposed measures will bring significant changes for employers so we may not see these provisions come into effect until 2027. 

The government's roadmap to implementation of the Employment Rights Bill indicates that implementation of the gender pay gap outsourcing measures is dependent on timelines for broader changes to gender pay gap reporting including the related measures in the above Bill.