In focus by topic
The government’s key employment policy changes, by topic.
Quick links
Diversity and inclusion
Equal pay, pay gaps and equality action plans
In short summary, what is changing? Large employers (i.e. those with 250 employees or more) will be required to publish an equality action plan on addressing gender pay gaps and prescribed information in relation to such plans, as well as naming large providers they contract with for outsourced workers. A Regulatory Enforcement Unit will be established for equal pay matters. Measures relating to ethnicity and disability reporting and equal pay rights will be delivered through the (as yet unpublished) Equality (Race and Disability) Bill. What are the next steps? Subject to prior consultation, regulations will be made to require large employers to (a) develop and publish an equality action plan showing the steps that they are taking in relation to gender equality (including addressing the gender pay gap and supporting employees going through the menopause); and (b) publish prescribed information relating to the plan. The government will also consult on the Equality (Race and Disability) Bill once it is published (expected to be in 2025). What should employers do now to prepare? Prepare to invest time and resources in assessing and understanding pay gap information and in formulating gender equality action plans. Looking ahead, also plan for additional pay reporting duties under the Equality (Race and Disability) Bill which will make it mandatory for large employers to report their ethnicity and disability pay gap. Advance work on data collection, assessment and understanding of pay gaps will be required.
Harassment
In short summary, what is changing? All employers will be required to take ‘all’ reasonable steps to prevent workplace sexual harassment and to prevent third party harassment (whether related to sex or any other protected characteristic). Disclosure of sexual harassment will be explicitly protected under the whistleblowing legislation. What are the next steps? Regulations must be made to specify steps which an employer must take and matters to which they must have regard for the purposes of meeting the obligation to take all reasonable steps to prevent sexual harassment. What should employers do now to prepare? Employers will need to be proactive in how they prevent and tackle harassment at work, with the reasonable steps varying from employer to employer depending on factors such as the employer’s size, the sector it operates in, the working environment and its resources.
Family-friendly rights
Flexible working
In short summary, what is changing? In response to an application for flexible working, an employer may continue to rely on the existing statutory grounds to refuse. However, the Employment Rights Bill adds additional requirements: that it must be reasonable for the employer to refuse on that/those ground(s) and, when notifying its refusal, explain why it considers it reasonable. What are the next steps? In addition to the changes in the Bill, the government is also expected to issue regulations which specify steps an employer must take in order to comply with the requirement to consult before rejecting an application (a consultation duty was only recently added this year). The Acas Code on flexible working will also need to be updated. What should employers do now to prepare? Anticipate more workers expecting to work flexibly and tribunal claims to consider the reasonableness of an employer’s refusal. However, the Bill does not change the potential penalty (eight weeks’ pay). Risk assess the impact on your current flexible working strategy, including policies and culture.
Protection from dismissal during pregnancy, maternity and other leave and upon return
In short summary, what is changing? The Employment Rights Bill enables regulations to be made to ban the dismissal of women who are pregnant, on maternity leave, and during a six-month return-to-work period, except in ‘specific circumstances’. Protection will also be extended to employees in respect of adoption, shared parental, neonatal care and bereaved partners paternity leave and for a period after returning to work from taking these forms of leave. What are the next steps? Further regulations are required to determine the detail of this, including what the ‘specific’ circumstances will entail. What should employers do now to prepare? Employers should expect that dismissing an employee during a protected period will only be lawful in limited circumstances and ensure processes are in place to keep a record of those employees who are within a protected period across the business to reduce the risk of breaches of the proposed new laws (particularly in large organisations).
Parental and other leave
In short summary, what is changing? Paternity and unpaid parental leave will become day one rights and the current restriction on taking paternity leave after shared parental leave will be removed. In addition, a new right to unpaid bereavement leave will be introduced. What are the next steps? In relation to bereavement leave, further regulations are required to confirm the employee’s required relationship to the person who has died, the length of the leave (at least one week) and the period in which the leave must be taken (which must extend to at least 56 days after the person’s death). The government has indicated that it will, in due course, review the parental leave system as a whole, plus carer’s leave, and consider further change. What should employers do now to prepare? Anticipate amending paternity and parental leave policies and consider any current compassionate leave policies and how the new right to bereavement leave may interact.
Trade unions and collective labour law
In short summary, what is changing? The Employment Rights Bill contains a range of trade union changes (these are set to increase reflecting a consultation which includes additional proposals), including:
- an employer duty to inform all employees of their right to join a union
- prescribing a legal process, overseen by the Central Arbitration Committee, by which unions can request, negotiate and enforce workplace access for officials to meet, represent, recruit or organise members
- lowering the thresholds to secure statutory recognition for collective bargaining with an employer (e.g. no longer requiring that a union is likely to have support from the majority of the bargaining unit, removing the 40% support threshold in a recognition ballot and consulting on reducing the 10% application threshold – potentially to between 2%-10%)
- repealing certain aspects of industrial action regulation introduced in the last 10 years, including: repealing turnout thresholds in ballots and reverting to simple majority voting; reducing the information a union must include on the ballot paper; reducing advance notice of industrial action from 14 to 7 days; and repealing the 2016 picketing provisions
- introducing protection against detriment for taking part in industrial action (addressing the recent Mercer case law), strengthening protection against blacklisting and the rules on automatic unfair dismissals for protected industrial action (the 12 week protected period is abolished)
- creating new rights and protections for union reps, including new rights for union equality reps and for reasonable accommodation and facilities for reps when carrying out union duties
- repealing the 2024 changes to public sector employers’ check-off duties and the 2023 minimum service levels legislation
- introducing powers to create a Fair Pay Agreement (FPAs – a new form of sectoral collective bargaining) in the adult social care sector
What are the next steps? Some of the industrial action changes (to ballot thresholds and more) will take effect two months after the Bill receives royal assent next year. Repealing the minimum service levels legislation will happen immediately the Bill is passed. The remaining changes will take longer, reflecting the need for enabling regulations and further consultation. The first of several consultations on trade union changes was published in October 2024 and the government intends to amend the Bill, to add new measures proposed in the consultation (or to amend existing measures in the Bill), after the consultation closes and before royal assent.
Beyond the current changes in the Bill, there is a commitment to enable employees to collectively raise grievances to Acas and to ensure the right to trade union representation includes gig and platform workers.
The government has also committed to permitting electronic balloting for union statutory ballots, potentially in 2025. What should employers do now to prepare? In response to the de-regulation of strikes, unionised employers should review the state of industrial relations, the risk of industrial action and how they can best prepare for situations where it will be simpler and quicker for a union to commence official industrial action.
Unionised employers should also prepare to review and update their facility and time off agreements, reflecting the changes to come.
The new right for unions to access workplaces is a significant change, particularly for workplaces not currently unionised. All employers should prepare for access requests and understand the legal process that will govern such requests.
In relation to the changes to statutory recognition (and when taking account of the new right for unions to access workplaces for recruitment and organising purposes), employers should anticipate an increase in recognition requests and consider acting now to review their engagement strategy, including assessing existing employee relations and identifying and addressing engagement concerns.
Adult social care employers should anticipate a lengthy consultation and implementation period, reflecting the complexity and relative novelty of FPAs.
AI in the workplace
Surveillance technologies
In short summary, what is changing? The government will consult on how these technologies are implemented in the workplace, including the role of trade unions and worker representatives (it is expected to include a duty to meaningfully consult with them). What are the next steps? There are no timescales attached to this consultation as yet and it is not expected in the short-term. What should employers do now to prepare? Anticipate reform and stay updated. A duty to consult, if included, reflects the direction of travel in recent EU legislation (e.g. on platform workers, which requires employers to involve worker representatives on the use of AI and algorithmic decision-making).
Business immigration
Business immigration
In short summary, what is changing? The government has committed to reducing net migration by improving the training and working conditions of British workers, restricting entry to the immigration system for those employers breaching employment law, reviewing the Family Immigration Rules (including the minimum income requirement) and continuing measures to prevent abuse of student and Graduate visa routes. What are the next steps? The government is legislating to establish Skills England (which will create a formal link between worker migration data and a skills policy). Employers who repeatedly breach immigration law or commit serious employment breaches will be banned from sponsoring migrant workers for at least 2 years (up from a year maximum). Action plans for minor breaches of immigration or employment law will be extended to 12 months maximum, with companies prohibited from passing on sponsorship costs to migrant workers. It has also increased immigration enforcement in relation to sponsor licence and right to work compliance which could result in a range of sanctions, including downgrading/suspending/revoking sponsor licences, civil penalties, business closure orders and potential prosecution against employers hiring illegal workers. What should employers do now to prepare? Audit pre-employment and ongoing right to work processes, reflecting the government’s emphasis on compliance. In anticipation of further restrictions on the Skilled Worker route, employers should have good visibility of the areas where this route is used. Given the focus on the upskilling of British workers, another use for this data will be to assess what steps might be possible to reduce reliance on the Skilled Worker route in the medium to longer term.
Enforcing workplace rights: by the state and in tribunals
Single enforcement body
In short summary, what is changing? A new Fair Work Agency (FWA) bringing together existing enforcement bodies will be established to enforce employment rights and support employers looking for guidance on how to comply with the law. The FWA will have inspection powers and will be able to issue fines if employers do not uphold protections within its remit. What are the next steps? Since establishing the FWA will be a new public expenditure, the House of Commons will need to approve that expenditure before the reform can be taken forward. The implementation of the FWA will be subject to consultation. What should employers do now to prepare? Expect a targeted approach to enforcement, including on holiday pay, sick pay and the national minimum wage. Employers should consider undertaking a pay audit of their workforce pay practices to identify and address any inadvertent issues.
Employment tribunal time limits
In short summary, what is changing? The Employment Rights Bill will increase the time limit for making claims in employment tribunals from three to six months. This would bring the time limit for all claims in line with the time limit for statutory redundancy and equal pay claims (which is already six months). What are the next steps? The Employment Rights Bill is being amended to contain a provision to enact this change. What should employers do now to prepare? Review litigation strategies and processes. A doubling of most tribunal time limits may lead to an increase in tribunal claims, particularly when combined with changes to the qualifying period for unfair dismissal. However, the longer period also increases expectations that employees act to mitigate their loss, by finding new employment, and could provide extra time for complaints to be settled.
Worker status
Single ‘worker’ status
In short summary, what is changing? The government will consult on creating a single status of worker for all but the genuinely self-employed (this could give ‘workers’ the same rights as ‘employees’, including unfair dismissal, by merging the two tiers into one). It has also committed to enhancing the rights of the genuinely self-employed (including extending health and safety protections). What are the next steps? There are no timescales attached to this consultation as yet. What should employers do now to prepare? Expect a lengthy consultation, reflecting the challenges involved and the need to avoid creating new, inadvertent status litigation risks. If a single worker status is to be created, employers should assess potentially significant changes to staffing models, costs, risks and incentives.
Atypical and casual workers
Zero hour contracts (ZHCs) and guaranteed hours
In short summary, what is changing? A new duty will require employers to offer qualifying workers on ZHCs and those with a ‘low’ number of guaranteed hours, who work more than these hours, a guaranteed hours contract which reflects the hours they work over a reference period. Provisions also regulate worker acceptance or rejection of the offer. In addition, there is a new duty to provide reasonable notice of shifts for certain workers, including those on ZHCs, and of any changes in shift, together with a right to payment for cancelled, moved or curtailed shifts. There are related worker protection and tribunal enforcement provisions. What are the next steps? Consultation will address further details of the new provisions, such as to scope ‘low-hour’ workers and to ensure that, where work is genuinely temporary, there is no duty to offer permanent contracts. A consultation on how the changes will apply to agency workers was published in October 2024, the results of which will inform amendments to the Bill. Extensive regulations will also provide detail on how these changes will apply in practice. What should employers do now to prepare? While workers may choose to remain on ZHCs if they wish, employers should expect increased costs and administration (in particular, due to the duty to offer guaranteed hours, if applicable). As part of assessing their response to these changes, employers may consider moving away from some ZHCs in favour of alternative contractual arrangements. However, they should first assess the Employment Rights Bill’s ZHC contents (and measures in subsequent ZHC regulations) before deciding their response given the scope and complexity of some of the details.
National minimum wage, sick pay and tips
National minimum wage (NMW)
In short summary, what is changing? The government has already changed the Low Pay Commission’s (LPC) remit, linking the NMW rate to the cost of living.
It will also remove the age bands to equalise the rate for adult workers (removing the band for 18-20 year olds) and has committed to enforcing the payment of NMW for travel time, if applicable. What are the next steps? Equalising the adult rate is expected to happen progressively. This reflects the government’s instruction to the LPC to narrow the gap between the NMW 18-20 year rate and the National Living Wage by taking steps, year by year, in order to achieve a single adult rate. It has also asked that the under 18 and apprentice rates are set as high as possible without damaging the employment prospects of each group.
This approach was confirmed when the government announced the rates which apply from April 2025, including a 16.3% increase for 18-20 year olds (with a £10 hourly NMW rate). The rate for 21 years and over will be £12.21. What should employers do now to prepare? Expect increased costs and compliance risks. Audit NMW processes, reflecting the complex rules and risks of inadvertent breaches. HMRC’s enforcement policy makes no distinction between deliberate and accidental breaches and non-compliance risks reputational damage, large financial penalties and back pay to affected workers for up to six years.
Tips
In short summary, what is changing? Employers will be required to consult with trade union/worker reps (or affected employees if no reps are in place) before producing the first version of a written tipping policy and to review the policy at least once every three years and in consultation with reps or affected employees. What are the next steps? Once the Employment Rights Bill receives royal assent, expected to be in 2025, this change may then be implemented by regulations, as it does not require further consultation or detailed regulations. What should employers do now to prepare? Anticipate scheduling review dates on written tipping policies and allow for consultation with appropriate representatives/affected employees as part of that review.
Statutory sick pay (SSP)
In short summary, what is changing? SSP will be available from the first day of illness, removing the current three day waiting period. In addition the current lower earnings limit (£123 per week) will be removed, making SSP available to lower paid employees. The rate of SSP will be set at either the flat rate in force from time to time (currently £116.75 per week) or a prescribed percentage of the employee’s weekly earnings, whichever is lower. What are the next steps? The government published a consultation in October 2024 on the percentage replacement rate for those earning below the current flat rate of SSP. Following the consultation, it will make this change through a government amendment to the Employment Rights Bill during its passage. What should employers do now to prepare? Budget for increased SSP costs if employers do not pay enhanced company sick pay. Review sickness absence policies and ensure managers are adequately trained on managing short-term sickness absence, levels of which may rise as a result of these changes.
Restructuring and dismissal
Day one unfair dismissal rights
In short summary, what is changing? The existing two-year qualifying period will be removed for claims of ordinary unfair dismissal, giving employees greater job security from day one of them starting employment. During an “initial period of employment” (and during the period of three months after the end of that period if the employer has given notice of termination before the end of the period), the test for a fair dismissal will be modified to allow employers to terminate employment more easily for conduct, capability, illegality or some other substantial reason (SOSR) relating to the employee (it should be noted that such reasons do not include redundancy, or SOSR unrelated to the employee, where employees will receive full “Day one” rights ). What are the next steps? The government will consult on the duration of the “initial period” (with its stated preference currently being 9 months), how that interacts with the Acas Code of Practice on disciplinary and grievance procedures and the compensation regime for successful claims arising out of the termination of employment during the initial period, which is expected to be subject to a compensation cap. Regulations will be made to specify the initial period and to modify the operation of the test for a fair dismissal during that period. The reforms to unfair dismissal will not come into effect before autumn 2026. What should employers do now to prepare? Review recruitment practices, including current probationary periods (and how they are monitored and extended), dismissal processes and prepare to amend contractual clauses, performance management/probationary procedures and manager training to meet the new requirements. Prepare for an increase in unfair dismissal claims and consider how to resource their management.
“Fire and rehire”
In short summary, what is changing? Where an employee is dismissed by a business for not agreeing to a variation of their contract of employment, or to enable the employer to re-engage them (or replace them with another employee) under a varied contract to perform substantially the same duties, that dismissal will be treated as automatically unfair. However, it will not be automatically unfair if the reason for the variation was to eliminate, prevent or significantly reduce/mitigate financial difficulties affecting the employer’s ability to operate as a going concern and it could not reasonably have avoided the need to make the variation. The Employment Rights Bill also sets out a number of relevant factors to be considered when assessing fairness of the dismissal, including the level of consultation carried out. What are the next steps? The government has published a consultation on allowing employees to apply for interim relief in respect of fire and rehire dismissals (i.e. an immediate hearing where a possible outcome would be to preserve old terms and conditions pending a final hearing) which is currently available for whistleblowing and trade union dismissals. What should employers do now to prepare? Employers should expect that fire and rehire will only be lawful in a very small minority of circumstances. An employer that fails to evidence sufficient financial difficulties and/or acts unreasonably, as assessed under the Bill’s provisions, risks being subject to significant financial penalties and legal risks. The bar is set very high. As a result, the wording of contracts, the offer of employee incentives, consultation processes and negotiation strategies will all need to be carefully considered in this context.
TUPE
In short summary, what is changing? The Employment Rights Bill provides powers to reinstate and strengthen the ‘two-tier’ Code of Practice (subject to devolved arrangements in Wales and Northern Ireland), which applies where workers are transferred from the public to the private sector and work alongside private sector employees, and is aimed at both sets of workers not being treated less favourably. What are the next steps? The Code will be consulted upon and further regulations are required before this change may be implemented. What should employers do now to prepare? These changes will have significant implications for affected employers. Employers should also note that the government has committed to: reviewing “a wide variety of issues relating to TUPE regulations and process, including how they are implemented in practice”; and extending the Freedom of Information Act to apply to private contractors providing public services and to publicly funded employers.
Collective redundancies
In short summary, what is changing? The duty to collectively consult on redundancies will be widened by changing the trigger from 20 or more employees at one establishment, to that number across the employer. The HR1 notification (to the government) trigger will also be similarly amended. Changes are also made to collective redundancy notifications for ships’ crew. Additional changes, to be added to the Bill in due course, have also been proposed to collective redundancy consultation remedies (see next column). What are the next steps? The government has published a consultation proposing further changes which, depending on the result of the consultation, will lead to the Bill being amended to include: increasing the maximum protective award that a tribunal can award from 90 to 180 days, or removing the cap entirely; and/or making interim relief available to employees who bring claims for the protective award. What should employers do now to prepare? Changing the trigger in this way may result in a rolling consultation exercise for larger, multi-site employers experiencing ongoing change, to comply with the ‘whole’ employer numbers test. This will require pro-active assessment of whether the new trigger is met. It may also result in more collective consultation, involving workplace representatives and trade unions, and employers should consider how they will manage any such increase. Changing the remedies, as proposed, would introduce the potential of significant new risks for a failure to comply with collective consultation.
Health, safety and wellbeing at work
Right to ‘switch off’
In short summary, what is changing? A statutory Code of Practice will be introduced, not a mandatory right to disconnect. The Code may require employers to introduce local policies which reflect the needs of different workplaces. What are the next steps? The timing of the Code is currently unclear. What should employers do now to prepare? Stay updated with developments and expect consultation on the Code, and the H&S review, before any changes are introduced.
Health and safety (H&S) review
In short summary, what is changing? Review, and modernise, existing H&S regulation, including taking steps to strengthen the H&S rights of the self-employed, to address the needs of a diverse workforce and extreme temperature risks at work. What are the next steps? The timing of the review is currently unclear. What should employers do now to prepare? Stay updated with developments and expect consultation on the Code, and the H&S review, before any changes are introduced.
ESG and sustainability: employment policies
Public procurement and social value
In short summary, what is changing? The government will use public procurement to raise employment standards, including proposals to mandate the consideration of a company’s record on worker treatment, equality policies and trade union recognition as part of the contract award process. What are the next steps? The timing is unclear although the government has stated that it will take this forward alongside wider plans to reform the procurement system, commencing in 2025. What should employers do now to prepare? ESG already has a presence in procurement undertaken by some public sector and private sector bodies, and this is set to increase. Employers should prepare for its social record to be included as part of new public procurement selection criteria. Those unable to meet these criteria may find it increasingly difficult to secure certain public procurement contracts.
Pensions
Pensions review
In short summary, what is changing? The government is undertaking a review to consider how to drive scale within the workplace DC pensions market and the local government pension scheme with a view to increasing investment in UK private assets and boosting member outcomes. An interim report and two related consultations were published in November 2024 with a final report due to be published in Spring 2025. However, reports suggest the government has decided to postpone phase 2 of the review indefinitely. This was due to be more wide-ranging and to consider issues such as improving adequacy. A Pension Schemes Bill is due to be introduced in 2025. It will contain legislation to implement a new value for money framework and a solution to deal with the growing number of small DC pension pots. It will also require trustees of DC schemes to offer a range of retirement solutions to their members. The Bill is also due to contain legislation to implement measures arising out of phase 1 of the pensions review. What are the next steps? A final report on phase 1 of the pensions review and responses to the current consultations are due to be published in Spring 2025. Reports suggest phase 2 of the review has been postponed indefinitely. The Pension Schemes Bill is due to be published in Parliament in Spring or Summer 2025. It will take account of the review’s outcome and implement other, more long-standing proposals. What should employers do now to prepare? Employers should continue to engage with the pensions review and respond to the current consultations. Employers will no doubt want to share their views on the proposals for mandatory reviews of their pension arrangements every 3 to 5 years and for there to be a nominated executive at board level who is responsible for retirement outcomes. Employers should also consider how their pension arrangements may be impacted by the reforms due to be implemented through the Pension Schemes Bill.
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.
Share this page