The UK government is set to introduce significant reforms to employment law with the forthcoming Employment Rights Bill, anticipated to become law in the latter half of 2025. This legislation aims to enhance worker protections and promote fair treatment in the workplace. Below is an overview of the key provisions and their potential impact on both employers and employees.
1. Extension of Pay Gap Reporting
The Bill proposes mandatory pay gap reporting for employers with more than 250 employees, extending beyond gender to include ethnicity and disability. This initiative seeks to promote transparency and address disparities in the workplace.
2. Strengthening Equal Pay Rights
To combat discrimination, the Bill aims to:
• Broaden Equal Pay Protections: Extend rights to workers facing discrimination based on race or disability.
• Regulate Outsourcing Practices: Ensure that outsourcing is not used to circumvent equal pay obligations.
• Establish an Enforcement Unit: Create a regulatory body, with trade union involvement, to oversee equal pay compliance.
3. Prohibition of ‘Fire and Rehire’ Practices
The Bill seeks to end the practice of dismissing and re-engaging employees on less favorable terms, commonly known as ‘fire and rehire.’ Such dismissals will be deemed unfair, except in limited circumstances.
4. Enhanced Collective Consultation Requirements
Employers proposing to dismiss 100 or more employees within a 90-day period will face stricter collective consultation obligations, including:
• Extended Consultation Period: Doubling the minimum consultation period from 45 to 90 days.
• Tribunal Powers: Employment tribunals will have the authority to adjust protective awards by up to 25% for unreasonable non-compliance with consultation requirements.
5. Pay and Tax Changes
Effective from April 1, 2025, the following adjustments are proposed:
• National Living Wage: Increase from £11.44 to £12.21 per hour for individuals aged 21 and over.
• National Minimum Wage: Adjustments for various age groups, including an increase from £8.60 to £10.00 per hour for those aged 18 to 20.
• Statutory Payments: Anticipated increases in statutory payments from April 2025.
Consultation and Implementation Timeline
The government has committed to extensive consultations throughout 2025 to refine these proposals. Most changes are expected to be implemented in 2026 or later, allowing employers time to adapt to the new regulations.
Implications for Employers and Employees
Employers should proactively review and update their policies to ensure compliance with the forthcoming changes. Employees will benefit from strengthened protections and greater transparency regarding pay disparities.
As the Employment Rights Bill progresses, staying informed and prepared will be crucial for all stakeholders in the UK labor market.
For personalised advice on how these changes may affect you or your organisation, please contact Frederick Solicitors.
