UK Employment Law Coffee Break: Employment law reforms, our five predictions for 2025 and our latest immigration update

Employment law reforms: Join us at our next webinar and visit our dedicated 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 here to join us.

You can track the status of the government's employment law reforms and actions to consider on our dedicated microsite.

What will 2025 bring for employment law? Our top five predictions for employers

As we saw in 2024, 2025 is set to be a busy year for employers – as well as a significant number of employment law reforms being progressed, employers continue to deal with the day-to-day challenges of managing today's workforce, alongside the current economic challenges and evolving ways of working – technology continues to develop and we anticipate increasing reliance on AI by employers, both in recruitment and workforce management, as well as business delivery.  

1. Continued progress towards significant employment law reform

During 2025, the government will continue to progress with its proposed reforms, originally announced in its Make Work Pay paper. The end of last year saw the publication of the Employment Rights Bill, providing further detail on a number of measures, together with the government's Next Steps paper on how other proposals, not included in the bill, will be taken forward. The Employment Rights Bill is currently progressing through Parliament and is expected to receive Royal Assent mid-2025, although many of the reforms will not come into force until 2026 (the government has already committed to not introducing the proposed reforms to unfair dismissal until autumn 2026.

During the first half of this year we are expecting the government to publish the draft Equality (Race and Disability) Bill which will widen the statutory legal protection on equal pay and pay gap reporting, as well as a number of consultations and reviews on its legislative proposals and other potential areas of reform.

Our dedicated microsite looks at the government's proposals, implications, and actions for employers and how they are being progressed.

2. Protecting against sexual harassment and wider workplace harassment

The end of 2024 saw a new legal duty come into force for employers to take reasonable steps to prevent workplace sexual harassment. This new legal duty was accompanied by detailed guidance from the Equality and Human Rights Commission which, among other factors, strongly recommends that employers undertake a risk assessment to identify measures for compliance. This new duty is notable in that it covers taking reasonable steps to prevent third party sexual harassment; it is also anticipatory in nature – the EHRC can take enforcement action even where no actual act of sexual harassment has taken place. Where an individual does claim sexual harassment in the Employment Tribunal, the tribunal has a power to uplift any compensation award by up to 25% where it finds that the preventative duty has been breached.

Undertaking a sexual harassment risk assessment as soon as possible should be high on employer agendas for 2025. It will be important that any measures identified are implemented and their effectiveness, as well as the risk assessment itself, kept under regular review.  

Sexual harassment allegations are always a sensitive and difficult area requiring careful handling to ensure that both the alleged perpetrator and victim are appropriately supported. Effective policies and training will be critical in managing expectations, as well as ensuring HR and managers are trained on conducting investigations and managing issues when they arise.

With the Employment Rights Bill providing for greater statutory protection around workplace harassment, including reintroducing a wider protection against workplace third party harassment, it is more important than ever for employers to get their house in order now.

3. A focus on hybrid working models and the impact of statutory flexible working rules

The second half of 2024 saw a number of businesses announcing their intention to move away from hybrid working policies which had been implemented following the Covid pandemic and require more office attendance. This move comes alongside reforms to the statutory right to request flexible working; in April 2024 the statutory right to request flexible working become a day one right and the government is currently proposing further reforms including a requirement that any decision by an employer to refuse a request on one of the eight statutory grounds must be "reasonable".

Employers moving away from their current hybrid working models will need to do so taking into consider a number of legal and practical issues: Is the existing hybrid working model contractual? Will a requirement for office attendance generate a significant number of statutory flexible working requests? How will competing requests be dealt with? Will a requirement for office attendance inadvertently discriminate – for example many employers will be caring for children or elderly relatives or may be managing their own health condition? What will be the impact on recruitment and retention? Has there been a positive impact on staff well-being? Can any disadvantages to hybrid working (for example, concerns over performance and training) be addressed by other measures?

We are likely to see more businesses in 2025 seek to tailor their hybrid working arrangements to ensure that they not only recruit and retain a strong skilled workforce but that they meet business targets and ensure their financial viability in what are set to be challenging times.  

4. Optimising employee performance

A key mission of the new government is to ensure that individuals are able to find work and stay in those roles. Indeed, employers are managing an increasingly diverse workforce, including greater awareness and openness regarding the workplace adjustments employees may need to perform their roles as a result of a disability, mental health condition, age-related requirements, including caring responsibilities or neurodivergence.

This new diverse workforce brings many advantages to the workplace but employers face a difficult challenge in determining at what point an employee's particular working requirements cannot be accommodated, for example when is something no longer a reasonable adjustment for a particular employee in a particular role. It is increasingly critical for employers to understand their legal responsibilities, including their duties under the Equality Act 2010, and how to effectively support and manage each employee's requirements.

It is essential that managers are trained and supported so that they are confident in understanding how to identify and handle the specific concerns that will inevitably arise in any diverse workforce.

5. Increase in restructurings, including redundancies

Increased costs to employers arising from the government reforms announced in 2024 were reinforced following the Autumn Budget 2024 which announced changes to the statutory national minimum wage rates, employer national insurance contributions and the relevant thresholds. Concern from business has been voiced that making it more expensive to hire is directly in conflict with asking companies to recruit more people who have been out of jobs for years.

The government has expressly recognised that the bill's measures could have the potential to cause unintended consequences, with main risks including higher labour costs weighing on demand for workers and damaging employment prospects, costs being passed back onto workers in the form of worse terms and conditions, and increasing incentives to employ more workers on casual and temporary contracts. The pass through of higher labour costs from businesses to other parties could also create unintended consequences. Against this backdrop we are likely to see organisations increasingly focus on their internal efficiencies and the use of technology. Restructurings and ultimately redundancies may be inevitable.

Employers undertaking restructurings will also need to bear in mind potential reforms in this area, including the proposal to remove the "establishment" requirement when determining whether collective consultation is triggered and which when in force will mean that the obligations are triggered based on the total number of proposed redundancies made by an employer across all work sites and units rather than at each individual site or unit. The government is also consulting on increasing the current protective award for breach of the collective consultation rules (or removing the cap completely). While any reforms are unlikely to take effect before 2026, at the earliest, these proposals, particularly around the "establishment" requirement, may mean increased employee and trade union scrutiny.

Our 2025 immigration update

In our latest immigration update, we look at what is on the horizon for UK business immigration following the change in government, as well as providing a more detailed look at the widely publicised proposal to link skilled worker visas to the "skills gap" and the training of the domestic workforce.  We also take a detailed look at the new Electronic Travel Authorisation scheme, which anyone coming to the UK for a visit (work or otherwise) will need to know about, together with updates on the right to work and its check processes and recent changes for those on student or graduate visas looking to switch to work-based visas.

Please do reach out to our head of immigration, Gavin Jones or your usual Osborne Clarke contact if you would like to discuss any of the issues raised.