United Kingdom: Employment – 2024 Highlights and 2025 Outlook

This year in the United Kingdom, there have been a number of key changes in employment law, and the last quarter of 2024 has foreshadowed various further developments still to come, largely as a result of the Employment Rights Bill. In this article, we outline the highlights from 2024 and look ahead to 2025.

2024: HIGHLIGHTS

• Duty to Prevent Sexual Harassment. Since October 2024, employers have been under a new proactive duty to prevent sexual harassment as a result of the Worker Protection (Amendment of Equality Act 2010) Act 2023. This preventative duty requires businesses to take “reasonable steps” to prevent sexual harassment in the course of employment, including sexual harassment by third parties. While there is no exhaustive list of what these steps should entail, the EHRC’s technical guidance provides suggestions, including comprehensive policy reviews, conducting risk assessments, and training for all staff. If an employment tribunal finds that this preventative duty has been breached, it can award an uplift of up to 25% on any discrimination compensation awarded, to reflect the extent to which the tribunal considers the employer has breached the duty. The uplift covers all compensation for discrimination, and not just sexual harassment.
• Flexible Working Rights: New Requirements and Expanded Employee Rights. In April 2024, changes were made to the statutory flexible working regime. Employees can now make a flexible working request from day one of their employment, a change from the previous 26 weeks’ service requirement. Employees can also make two flexible working requests in any 12-month period, rather than one, and no longer have to explain what effect the change will have on their employer. Employers now have to consult with employees before refusing a request and only have two months, rather than three, to reach a decision. At a time when many employers are striving to bring staff back into the office, these changes are likely to create an increase in formal flexible working requests and additional challenges for HR teams and management. Further changes to the regime are proposed under the Employment Rights Bill (see below).
• Enhanced Family Leave Protection. The Protection from Redundancy (Pregnancy and Family Leave) Act 2023, effective since April 2024, extended redundancy protections to employees returning from maternity, shared parental and adoption leave; i.e. the priority status given to such employees in terms of suitable alternative roles. Instead of being restricted to the period of leave, the protected period now applies as follows:
  
  • Pregnancy and Maternity Leave: protection starts when the employer learns of the pregnancy and continues until 18 months after the child’s birth; or, if the birth date is unknown, 18 months from the expected week of childbirth.
  • Shared Parental Leave: if leave is shorter than six weeks, protection ends on the last day of the leave. For leave over six continuous weeks, protection lasts 18 months from the child’s birth.
  • Adoption Leave: protection ends 18 months from either the date of the child’s placement for adoption; or, in the case of overseas adoption, the date the child enters the United Kingdom.
• Equal Pay: Thandi and others v Next Retail. A landmark ruling this year found that Next Retail had unlawfully paid its (predominantly female) sales staff less than its (predominantly male) warehouse workers. The employment tribunal agreed with over 3,500 sales staff that their work was of equal value to the warehouse staff and deserved equal pay. Next's market-forces argument – that its pay structure simply reflected the different market rates for the two groups – was rejected. It was found to constitute indirect sex discrimination, because it disproportionately disadvantaged women over men (given that women made up most of the sales staff). The decision, which could cost Next around £30 million in back pay, has huge implications for similar equal pay cases in the private sector, although Next has confirmed it plans to appeal; and so we may not have seen the final word on this issue yet.
• Redundancy: ADP RPO UK v Haycocks. This recent Court of Appeal decision brings clarification for employers conducting redundancy consultations. The judgment reinforces that consultation (whether individual or collective) must take place at a formative stage, when the employee can influence the outcome. It must also include consultation about the commercial rationale for making redundancies in the first place.
  
  Practical takeaways for employers include:

1. Timing matters: Start consultation as early as possible, when the proposal can still be said to be at a “formative” stage. This means early enough that the employee’s input can meaningfully influence the outcome.
2. Topics for consultation: Although group consultation is not required in an individual redundancy exercise (fewer than 20 proposed redundancies), the topics for consultation must include the commercial rationale, any proposed selection criteria and scoring methodology to be applied to a pool, and what information will be considered in carrying out any selection.
3. Transparency in scoring and criteria: Scoring should only take place after the consultation process has commenced, and employees in the pool have been given the opportunity to comment on the selection criteria.
4. Effective appeals process: A well-conducted appeal can cure procedural defects during the original consultation process. Therefore, it is advisable to offer one.

2025: OUTLOOK

The newly elected Labour government has published the Employment Rights Bill, described as the most significant reform of employment law in over 30 years. The numerous changes contained in the Bill will require further regulation and consultation, with implementation not expected until 2026.

Some of the key reforms in the “pro-worker and pro-business” Bill are:

• Unfair Dismissal: Day One Right. The qualifying period of two years to bring an unfair dismissal claim will be removed, so that employees have the right not to be unfairly dismissed from day one of their employment. Employers will, however, be able to dismiss more easily during or at the end of a probationary period, provided that certain procedural steps have been taken. The maximum length of probationary periods will be consulted on, with the Government’s initial suggestion being nine months. Although the change is not expected to take effect until Autumn 2026, employers will need to take steps in 2025 to prepare. This is likely to include updating contracts to ensure the inclusion of probationary periods, checking pre-employment screening procedures, and training managers to spot under-performers at an early stage and proactively deal with performance issues.
• Fire and Rehire: New Restrictions. The Employment Rights Bill will effectively outlaw fire-and-rehire practices – i.e., the process of re-contracting employees onto new terms by terminating their existing contracts and offering new (amended) terms. This will only be possible if the employer can show that, without the changes, it would be unable to continue as a going concern. This is a high bar, with efficiency improvements or routine cost-cutting unlikely to be good enough arguments. It will also push employment tribunals into unfamiliar territory, as they are not typically called upon to assess commercial matters or make financial judgements. In light of the new restrictions, flexibility clauses in employment contracts are likely to take on a new importance, otherwise where employee consent is required, consultation processes will become negotiation processes and undoubtedly take longer. Whilst in opposition, the Labour Party consistently expressed their commitment to ending fire-and- rehire practices, and so it seems unlikely that the consultation process for these changes will result in any materially weaker provisions.
• Zero Hours Contracts: Right to Request Predictable Hours. To address worker stability, the Government has introduced a “right to request predictable hours” for zero-hours contract workers. Workers on zero-hours contracts, and workers on low-hours contracts who regularly exceed their small number of guaranteed hours, can request to transition to guaranteed-hours contracts based on average hours worked over a 12-week reference period. Employers will also have to provide reasonable notice for shift changes or cancellations. The Government is consulting on extending these measures to agency workers. To prepare for these changes, employers should carry out an audit of their workforce to understand the extent to which zero-hours contracts are in use and what the impact of the new requirements might be.
• Flexible Working, Sexual Harassment and Family Leave Changes. The Employment Rights Bill will build on recent legal changes, further strengthening employee rights and protections beyond those introduced in 2024.
  
  An employer’s ability to reject flexible working requests will be limited even further, by having to show that their reasons are reasonable ones.
  
  The recently introduced duty on employers to take reasonable steps to prevent sexual harassment in the workplace will be extended to a requirement to take all reasonable steps.
  
  There are proposals for regulations to define the steps that should be taken.
  
  Additionally, paternity and parental leave will become day one rights and employees will gain a new day one right to (non-parental) bereavement leave.

• Further Workplace Reforms. In tandem with the Employment Rights Bill, the Government issued a “Next Steps” paper that sets out certain further changes still to come, including:
  
  • Extended Pay Gap Reporting: Pay gap reporting for large employers (with 250 or more employees) is currently limited to gender, however, a new Bill has been promised to extend pay gap reporting to cover race and disability, albeit still only for large employers.
  • Simplified Employment Status Categories: The Government is considering consolidating the existing three-tier system of employment status. The plan is to reduce this to two categories: workers (with full employment rights) and self-employed (with none), thus removing the current middle category with some but not all employment law rights. Whether this will include a proposal to apply employment tax to all workers remains to be seen. Given the complexity of this change, it may be some time before we see draft legislation on it.
  • A “Right to Switch Off”: This new proposed right, anticipated to be introduced through a statutory Code of Practice, would allow employees to disconnect outside working hours, in an attempt to promote a better work-life balance.

2024 saw significant changes for UK employment law; however, looking forward, it seems that the most significant developments are still to come. The reforms in the Employment Rights Bill and the other anticipated changes are hugely significant. 2025 will be a year of preparation for employers in the United Kingdom, and close attention will need to be paid to the detail of what is eventually introduced, following consultation, so that practices can be adapted to ensure compliance and minimise exposure.

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