Employment, contingent workforce and immigration | UK Regulatory Outlook January 2025
Published on 13th Jan 2025
Employment law reforms | Get Britain Working white paper | Protective awards | Rise in minimum pay and family leave | 7 Gig Economy and Contingent Workforce predictions
What is on the cards for employers in 2025?
2025 looks set to be an active period for employers. As well as continuing to take the necessary steps to comply with the new legal duty to prevent sexual harassment, which came into force in October 2024, employers will be keeping a careful watch on the progress of the Employment Reform Bill and the government's other proposals set out in its Next Steps paper which accompanied the publication of the bill.
Employment law reforms
The Employment Reform Bill was published in October 2024 and is currently going through the parliamentary committee stage before returning to the House of Commons this January. The government has already listed a number of amendments to the bill, including a new power which increases the time limit for bringing employment tribunal claim (listed in a new schedule to the bill) from three to six months, as well as publishing four consultations (which all closed in December) on specific aspects of the reforms proposed.
As well as the proposals in the bill, employers can also expect the new government to progress in parallel other reforms set out in its Next Steps paper, including the publication of the draft Equality (Race and Disability) Bill which will push forward proposals around equal pay rights and pay transparency and potentially a non-legally binding Code of Practice on a right to switch off. At the end of last year, the House of Commons Women and Equalities Committee launched an inquiry to examine options for reform of paternity and shared parental leave and is conducting a call for evidence which will last until 31 January 2025.
It is important to remember that these proposals are not yet law and the government has indicated that many of them will not come into force until 2026, with the reforms to unfair dismissal protection not becoming a day one right until autumn 2026. However, we are anticipating a number of further consultations on the proposals to be published in 2025, alongside a number of wider reviews, for example, on collective redundancies, TUPE and health and safety.
You can track the status of the government's employment law reforms and actions to consider on our dedicated employment law reforms microsite.
On 16 January, we will be holding our "looking ahead" webinar at which our employment lawyers Emma Wills Davies and Nicholas Haywood will discuss some of the key features of the employment law reforms being progressed by the new government, with a specific focus on bringing your workforce back to the office, protecting staff from sexual harassment and managing increased risks arising from the new unfair dismissal proposals. Please register for the webinar to join us.
Get Britain Working white paper
At the end of 2024, the government published its "Get Britain Working" white paper. The paper's stated intention is to reform employment, health and skills support to tackle rising economic inactivity levels, support people into good work and create an inclusive labour market in which everybody can participate and progress in work
As part of its work, the government will launch an independent review into the role of UK employers in promoting health and inclusive workplaces, considering what more can be done to enable employers to increase the recruitment and retention of disabled people and those with a health condition, including via the new jobs and careers service; preventing people becoming unwell at work and promoting good, healthy workplaces; and undertaking early intervention for sickness absence and increase returns to work.
The review will run until summer 2025 and the government has stated that it will involve "wide-ranging engagement with employers, employees, trade unions, health experts and disabled people and those with health conditions". It is intended to "complement the government's Make Work Pay reforms, which will tackle job insecurity and expand flexible working" (see above).
Key dates
20 January 2025: Power to increase protective awards in fire and rehire scenarios
Statutory provisions will come into force providing that an Employment Tribunal has the power to increase or reduce any protective award it makes by up to 25% for any unreasonable failure to comply with the provisions of the statutory code on dismissal and re-engagement. A tribunal already has a power to increase or reduce compensation, as the case may be, by up to 25% on related unfair dismissal claims.
April 2025: Rise in statutory minimum pay rates and statutory family leave payments
Increases to the statutory minimum wage rates were announced in the autumn budget, alongside the increases to the rate of employer national insurance. From 1 April 2025 the new rates will be as follows:
- The national statutory living wage will rise from £11.44 to £12.21 per hour.
- The national statutory minimum wage for 18 to 20 year olds will increase from £8.60 to £10.00 per hour.
- The national statutory minimum wage for those under 18 and the minimum rate for apprentices will increase from £6.40 to £7.55 per hour.
The following anticipated increases to statutory payments for family leave have been announced from April 2025 (subject to confirmation):
- Statutory sick pay will increase from £116.75 to £118.75 per week.
- Statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay will increase from £184.03 to £187.18 per week.
- The lower earnings limit to qualify for statutory payments will increase from £123 to £125, except for maternity allowance which will remain at £30 per week.
From mid-2025: Employment Rights Bill expected to receive Royal Assent
While it is anticipated that the bill will receive Royal Assent during 2025, many of the reforms will not come into force until later (the government has indicated that many reforms will not come into force until 2026, and unfair dismissal reforms will not come into force until autumn 2026 at the earliest). However, there are a small number of specific provisions which will come into force on the date the bill receives Royal Assent or shortly after and which are centred around trade union rights.
'All change' for UK contingent working and gig platforms: 7 predictions for 2025 to 2030
As reported in our November issue, around the world there is increasing government and media focus on the apparent inexorable growth in gig working and non-standard employment models and the general precariousness of some types of work.
We have analysed how the commercial models of staffing companies and platforms and the use of contingent workers will be affected by proposed tax, employment law and regulatory changes including the UK Employment Rights Bill and October 2024 Budget proposals.
In our full report we provide details of our seven predictions for 2025 to 2030. This includes increases in employment taxes such as employers NICs, "day one" rights for employees and rights to guaranteed working hours for workers leading to increased interest in self-employment models. In the October Budget, the government announced increases in employers NICs. It has committed to increase national minimum wage rates and is planning to introduce, by 2026, statutory employment law entitlements for employees from "day one" of employment. These include the right not to be unfairly dismissed, and the right of so-called "zero hours" workers to guaranteed working hours and to have notice of shifts and shift changes. This will put up employment costs significantly for all employers, especially in relation to new recruits and people who might otherwise only be engaged for a short time.
Additionally, we predict that there will be an increase in agency worker usage via staffing companies. The UK is likely to retain this mode of engagement for several years, at least, as an alternative to employment and self-employment. Because these agency workers will not be "employees", many organisations may see using agency workers as a way of minimising the impact of day-one employment rights for new starters (and possibly guaranteed hours rights). However, organisations using this approach will need to watch out for possible anti-avoidance rules imposing limits on when agency workers status can be used and, at some stage, guaranteed hours rights may be introduced for some types of agency worker.
Further, any surge in tax-driven self-employment will reduce when HMRC steps up enforcement action in the next few years, building on preparatory steps currently being taken by HMRC under IR35 and other tax measures. In addition, the move towards agency worker arrangements (in which organisations minimise the impact of the new developments by using staffing companies to engage workers on a traditional PAYE worker basis) are likely to be given further momentum by the increasing volume of HMRC action against what might otherwise be another "work around" for those organisations: that is, the use of self-employment arrangements.
There is also activity relating to umbrella arrangements at the "dodgy" end of that industry, with effective closures of some umbrellas using powers under VAT law and possible criminal action. This activity is mainly on a confidential basis at the moment, but a series of high-profile tax assessments are expected to be raised against major organisations in the next 18 months before HMRC runs out of time (in April 2026) to bring claims for 2021-2 – the first tax year under the new IR35 regime. Platforms face a challenge under this as well because the new Platform Reporting Regulations will require them from January 2025 to report to HMRC all payments via the platform to providers of services since January 2024.
If you would like a copy of the full report, covering the UK Employment Rights Bill and 2024 Budget announcements about NICs and umbrellas, please contact one of the Osborne Clarke experts below.
UK immigration: what's on the horizon?
Our latest UK Immigration Update takes a look at what is on the horizon for UK business immigration in 2025, as well as providing a more detailed look at the government's proposal to close the "skills gap" by linking the granting of skilled worker visas to the training of the domestic workforce.