Understanding new UK employment laws: key changes and what they mean for your business

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While recent headlines might suggest dramatic upheaval, the reality is more straightforward: the new Employment Rights Bill introduces targeted updates to workplace regulations that businesses can readily adapt to with proper planning.

These changes focus on three key areas:

1. Strengthened sexual harassment prevention
2. Expanded flexible working rights
3. Updated discrimination protections

For employers, this means reviewing and updating existing policies rather than completely overhauling their practices.

The Employment Rights Bill, which will become the Employment Rights Act, is at the forefront of these changes. The press has been buzzing with information about it, but much of that information has been misleading.

Employment law specialist Melanie Stancliffe of Cripps recently hosted an in-person seminar in partnership with Bespoke, breaking down these changes into practical, actionable steps.

She’ll help you separate fact from fiction and understand exactly what your business needs to do to stay compliant in 2025 and beyond.

Key changes in unfair dismissal rights

Perhaps the most widely circulated misconception is the introduction of “day one” unfair dismissal rights. The reality is that employees will not gain the right to bring a claim for unfair dismissal immediately upon their employment. Instead, the government has indicated that after an initial period, employees will eventually be able to bring such claims, but this won’t take effect until at least Autumn 2025.

Currently, an employee must have two years of service to claim unfair dismissal, with a few exceptions (eg pregnancy and whistleblowers). The new legislation aims to reduce this qualifying period, although the specifics are still under consultation. The government has suggested that the qualifying period could be six to nine months, meaning businesses will need to adapt their hiring processes accordingly. This shorter period will require employers to be more rigorous in assessing new hires from the outset.

Employers should consider enhancing their hiring processes, including refining job profiles and ensuring that performance reviews and appraisals are robust. This proactive approach will help establish clear expectations and performance metrics for new employees.

Changes to tribunal claim periods

Another change involves the timeframe for bringing tribunal claims. The current three-month window is under review, with discussions suggesting an extension to six months. While this change is not yet law, it emphasises the need for employers to manage potential claims effectively and keep communication channels open with former employees to mitigate risks.

There is a question over whether the tribunal will be able to handle an increase to the claims window, and so the Government is still in consultation on this.

Minimum wage adjustments

Another myth circulating in the press is that the Government is going to equalise the minimum wage for everybody. While this is the Labour intention, it’s not happening yet.

From April 2025, the national living wage for workers over 21 will rise from £11.44 to £12.21, an increase of 6.7%. Additionally, the wage for 18 to 20-year-olds will increase from £8.60 to £10.00, a notable 16.3% hike.

Sick pay reforms

There will be a legal change granting employees greater rights to sick pay. At present, statutory sick pay begins on the fourth consecutive day of absence. Many employers offer their own enhanced sick pay policies, but these are separate from the legal requirement.

Currently, statutory sick pay is only paid to employees who meet the lower earnings limit. That threshold is being removed, which means more part-time workers will qualify. As a result, statutory sick pay will become more widely available, and some commentators suggest this could lead to an increase in sickness absences.

This may have financial implications for employers, so it would be sensible to consider how sickness absence is managed. If there are specific trigger points for interventions such as occupational health referrals, it may be time to review them.

Zero hours contracts: evolution not revolution

The government has been vocal about the potential ban on zero hours contracts, but the focus has shifted to eliminating exploitative practices rather than a blanket ban.

Employers using zero hours contracts should consider whether these arrangements are genuinely reflective of the hours required and whether they might offer a minimum guaranteed payment to avoid potential exploitation claims.

Melanie participated in one of the government’s consultation discussions, where it was clear that, despite feedback from businesses, the government intends to proceed with these changes. If your contracts do not currently reflect actual working hours, this is something that needs attention. The government is not reconsidering its position, and no revisions are expected.While these changes are not yet in force, legislation is anticipated in 2025.
Understanding the implications of dismissal and re-engagement

One area of concern is the process of dismissal and re-engagement, often referred to as “fire and rehire.” The government has indicated that this should be a last resort, and employers will now be required to notify ACAS before initiating such discussions. This will likely lengthen the processes involved in redundancies and changes to employment terms, compelling employers to plan ahead more strategically.

Family-friendly leave policies

A suite of new family leave entitlements will reshape workplace policies. Unpaid carers’ leave introduces support for those caring for dependents with long-term conditions. The new neonatal leave provision offers up to 12 weeks of paid leave as a day-one right for parents whose babies require extended hospital care. Additionally, paternity leave qualifying periods will be removed, making more employees eligible from the start of their employment.

These changes require businesses to update their family leave policies and train managers in handling various leave requests. The removal of qualifying periods means more employees will be eligible sooner, potentially increasing the administrative burden on HR teams.

Redundancy consultation procedures

The consultation period for large-scale redundancies faces significant extension. Currently, businesses making 20-99 redundancies must consult for 30 days, while those making 100 or more redundancies must consult for 45 days. The government proposes extending this to 90 days or potentially removing the cap entirely. This change dramatically impacts business planning timeframes and increases the importance of early stakeholder engagement.

Failure to follow proper consultation procedures carries serious financial implications. Protective awards for non-compliance could increase from 90 days’ pay to 180 days’ pay, or become uncapped. This reinforces the need for careful advance planning and proper documentation of all consultation steps.

Equality action plans: a new focus on diversity

As part of the new legislative landscape, businesses will also need to prepare for the introduction of equality action plans. These plans will require organisations with over 250 employees to report on pay gaps relating to ethnicity and disability, similar to existing gender pay gap reporting requirements. This move aims to promote diversity and inclusion in the workplace.

Employers should begin auditing their pay levels and practices to identify any existing inequalities and ensure compliance with the new reporting requirements once they come into effect.

Preventing sexual harassment: legislative changes

One of the most pressing issues in the workplace today is sexual harassment. Following recent legislative changes, employers are now required to take proactive steps to prevent sexual harassment. This includes developing clear policies, conducting risk assessments, and providing training to staff on appropriate workplace behaviour. The Equality Act 2010 already prohibits sexual harassment, but the new legislation emphasizes the need for employers to anticipate risks and take reasonable steps to mitigate them.

Implementing effective policies

Employers should ensure they have a dedicated sexual harassment policy that is separate from other workplace policies. This policy should outline the procedures for reporting incidents, the support available to victims, and the consequences for perpetrators. Regular training should be provided to all employees, with a particular focus on managers and supervisors who play a key role in addressing complaints effectively.

Flexible working requests: what employers need to know

Flexible working requests have also undergone significant changes. Employees will now be able to make two requests per year instead of one, and employers must respond within two months. However, it’s important to note that employees do not have an automatic right to flexible working; they only have the right to request it.

Employers still have the right to refuse requests based on valid business reasons, but they must now provide a detailed explanation of why a request has been declined.

This places a greater onus on employers to consider requests carefully and to document their reasoning thoroughly.

You should establish a clear flexible working policy that outlines the process for making requests and the criteria for approval. This will help ensure consistency and fairness in decision-making, as well as provide clarity for employees about their rights and options.

Preparing for the changes ahead

As these new employment laws come into effect, it’s essential for businesses to stay ahead of the curve. You can take several proactive steps to ensure compliance with the evolving legal landscape:

• Audit existing contracts to ensure they align with upcoming requirements, particularly regarding working hours and flexibility.
• Review policies on sick pay, redundancy, and harassment prevention.
• Train managers on new employment laws and how to handle requests, complaints, and workplace disputes.
• Keep detailed records to mitigate the risk of tribunal claims and ensure compliance with reporting obligations.
• Plan ahead for wage increases and assess the financial impact of sick pay changes.

For businesses looking to navigate these changes effectively, consider seeking advice from legal professionals or HR consultants. They can provide tailored guidance to help you implement the necessary changes and maintain compliance with the evolving landscape of employment law.