The People Agenda 2025

United Kingdom

2024 was a significant year for employment related reform and there’s more on the People Agenda for 2025 and beyond. The Employment Rights Bill, described as the “biggest upgrade to rights at work for a generation”, was laid before Parliament on 10 October 2024 and while many of the changes outlined are not expected to come into force until 2026, employers should be planning in advance for these changes as well as taking steps to comply with the new duty to prevent sexual harassment in the workplace, which came into force on 26 October 2024. Other people-related changes afoot for 2025 include the introduction of statutory neonatal leave and pay and harsher penalties in relation to dismissal and re-engagement processes that do not comply with the new statutory code of practice.

In this Law-Now we summarise these reforms, including when they are expected to come into force, and suggest what employers can do to prepare for them.

Dismissal and re-engagement

On 20 January 2025, employment tribunals will gain the power to increase compensation awarded in a protective award claim (that is, a claim brought against an employer that they have failed to inform/consult employee representatives when proposing to make 20 or more redundancies) where there has been an unreasonable failure to comply with the Code of Practice on Dismissal and Re-engagement. This might include, for example, failing to provide the relevant information to employee representatives.

The Code of Practice, which was introduced under the previous Government, came into force on 18 July 2024. Its purpose is to ensure that employers carrying out dismissal and re-engagement processes take all reasonable steps to explore alternatives to dismissal and engage in meaningful consultation with employees/their representatives with a view to reaching an agreed outcome.

Although many of the steps outlined in the Code of Practice reflect existing ‘best practice’ in relation to dismissal and re-engagement processes, employers engaged or engaging in such processes should familiarise themselves with the Code and seek to comply with any additional steps that go further, such as extended notice periods. This will help to reduce the risk of an uplift in compensation in the event of a protective award claim.

For further information, see our previous Law-Now: Government publishes draft statutory code of practice on dismissal and re-engagement.

Statutory Neonatal Leave and Pay

New rights to statutory neonatal leave and pay are expected to come into force in April 2025 after the Neonatal Care (Leave and Pay) Act 2023 received Royal Assent in May 2023.

Eligible parents will be entitled to take up to 12 weeks’ paid neonatal care leave in addition to other existing statutory leave and pay entitlements such as maternity and paternity leave in order to care for a child who is receiving or has received neonatal care. 

The right to neonatal care leave will be a ‘day one’ right; there will be no qualifying service requirement. The right to neonatal care pay will be subject to an employee having at least 26 weeks’ continuous service with their employer and normal average weekly earnings of at least the lower earnings limit for National Insurance contributions (currently £123 each week). Employees taking or seeking to exercise their right to neonatal care leave will be protected from any related dismissal or detrimental treatment. 

While regulations are expected to set out further details about how the new rights will operate in practice (such as notice and evidential requirements), employers should plan ahead. Preparatory steps may include reviewing and updating family-related leave policies and procedures and delivering training to people managers and HR teams to ensure that they are aware of the new rights and how to deal with them in practice.

For further information, see our previous Law-Now: New family friendly entitlements for employees

Employment Rights Bill

The Employment Rights Bill sets out the most ambitious employment related reform for over half a century including changes to unfair dismissal rights, statutory sick pay, family-related leave, dismissal and re-engagement processes, zero hours contracts, flexible working arrangements, trade unions rights and protections against workplace sexual harassment.

While many of the changes under the Employment Rights Bill are not expected to come into force until 2026, the Government began to consult on aspects of the reform in October 2024 and further consultations are expected in 2025. These include consultation on (i) increasing the minimum collective consultation period where an employer is proposing to dismiss 100 or more employees from 45 days to 90 days and (ii) a statutory code of practice introducing a right to switch off.

For further information, see the Law-Now articles in our Employment Rights Bill Deep Dive series.

Draft Equality (Race and Disability) Bill

The Government’s Next Steps to Make Work Pay document, published in October 2024, indicated that consultation on a draft Equality (Race and Disability) Bill would begin “in due course” with a draft bill being published during the current parliamentary session, likely sometime in 2025. The Bill is expected to (i) make it mandatory for large employers (that is those with 250 or more employees) to report their ethnicity and disability pay gaps and (ii) extend equal pay rights to ethnic minorities and disabled people. While some employers already voluntarily report these pay gaps, for many the practical aspects of such changes will need some planning, including, for example, the collection of the workforce data to support this analysis. We anticipate extensive consultation on the draft legislation, with any related reform unlikely to be introduced until 2026 or beyond.

Please get in touch with your usual CMS contact if you would like to discuss the potential implications of any of these measures for your business and workforce.

Article co-authored by Abbie Smith, a trainee solicitor in the employment team at CMS.