Major changes coming to employment law: what to expect - February 2025

The new Employment Rights Bill is set to bring significant changes that every employer needs to be aware of.

This bill (which is currently going through Parliament) fulfils some pretty big manifesto pledges for labour, so unsurprisingly it’s going to bring some major changes to employment practices.

If you hire staff, schedule staff, manage staff or pay staff, it’s going to have an impact on you!

Why are we talking about it?

Essentially, it is going to push up wage costs even more.  And with wages being your biggest single cost, it is one you need to know about.

This bill is expected to become law in 2025, with most changes coming in April 2026, so you want to start planning now.  

Most companies will need to adjust contracts, working practices and policies so they are not hit with big negatives in a little over 12 months time when the Bill starts to bite.

The below is a short summary of the Bill as it stands - remember, lots can change before it becomes law so properly consider any changes you are planning on making and make sure you speak to your People team /

advisors.

7 key changes which are coming

1. Sick Pay from Day One

Right now, staff have to wait three days before they can claim Statutory Sick Pay (SSP).  Under the new law, SSP kicks in from day one – and there’s no earnings threshold, meaning every employee qualifies.

Impact: More staff will take sick days (as they will get paid something for all of them). Great for stopping sick employees from spreading germs around – not so great for your payroll costs. We expect companies to tighten up absence policies as a result and perhaps target on the Bradford Factor to tackle absence.

Monty score for likelihood: 7/10 (could see watered down)

2. End of the “Two-Year Safety Net” for Dismissals

Until now, you could part ways with staff fairly easily in the first two years. The bill changes that – unfair dismissal protection now starts from day one (after a probation period).

Impact: Firing someone will get trickier – it looks like you are still protected by probationary periods so we expect these to be extended as standard.  After this, you’ll need solid reasons and documented processes.  Policies need to be updated and followed much more rigorously.  

If you’re used to a quick “let’s call it a day” chat, that won’t cut it anymore. Get ready for more performance management!

Monty score for likelihood: 10/10 (manifesto pledge)

3. Guaranteed Hours for Regular Workers

New employees will have the right to a contract with guaranteed hours.

Impact: In itself, not huge other than you cannot offer Zero Hour contracts.  Many people will think about just putting in 1 hour contracts instead which, due to point 5 below, will not work in the way that you think.  Essentially, we believe that this point (and how it intersects with all other points here), will cause many businesses to reduce employee headcount.

Monty score for likelihood: 9/10 (manifesto pledge)

4. Last-Minute Rota Changes? That’ll Cost You

If you cancel or change a shift with little notice, you will have to compensate the employee.  How much compensation is not clear at this point.

Impact: Cutting shifts at the last moment loses its impact. Expect to pay if you pull someone off a shift at the last minute. Much better demand forecasting will be needed and ensuring there is work to do if staffing is too heavy so labour isn’t wasted will also be key.

Monty score for likelihood: 7/10 (still a bit wooly so could seem some big changes - but bear in mind provisions like this exist in many US states, so there are workable models that can be drawn on to overcome objections to this part of the Bill)

5. Average Hours Will Set Contracted Hours

Employees working regular but varying hours over a period (likely 12 weeks) must be given a contract reflecting their average hours.

Impact: No more keeping someone on low contracted hours while threy regularly work full-time. If they’ve been doing the hours, they’ll need an official contract stating so.  The impact here is pretty huge and could be very difficult to manage for more seasonal businesses.

Monty score for likelihood: 6/10 (likely to see some amendment)

6. Harassment Protection – Including from Customers

Employers will have a legal duty to prevent harassment – and that includes third-party harassment from customers. If a customer (or employees) behaves inappropriately towards staff, you’ll need to show you took “all reasonable steps” to stop it.

Impact: Significant training and education needed throughout businesses to work out how to reduce threats and then identify and deal with inappropriate behaviour.  

Monty score for likelihood: 8/10 (finer details likely to change)

7. Enforcement of employment rights – The “Fair Work Agency” (FWA)

A brand-new government body will oversee compliance with these new laws (and some existing laws).  Currently enforcement in employment rights mainly come through tribunals or some HMRC investigations with touch on certain legislation (such as minimum wage).  

The plan of the FWA will be to give workers easier access to resolutions.  It also gives employers one place to turn when discussing issues.  We can expect more investigations, more fines, and more scrutiny on all arrears including, minimum wage, holiday pay, and fair contracts.

Impact: You need to really be on top of your staff / payroll / pension / tronc compliance.  You will have more employees who can take you to tribunal (due to immediate employment rights) and and easier way of raising a complaint via the FWA.

Monty score for likelihood: 8/10 (it’s new - therefore expensive and the budget is tight - but it underpins the legislation so would be a surprise to see this go).

Thats not all!!!

There are 28 reforms in the bill.  Not all of them will make it to law, but you would expect the majority of them to come through.  This newsletter is just a summary and there are some things in there which may really impact you, so certainly get more familiar with things when the bill comes into law this year.

What should I do now?

The main thing you can do at this stage is take a look at your policies and your staff contracts and understand your current position.

Also review your general staff practices and labour costs, bearing in mind what may be changing.  Really spend some time considering what changes, if any are going to impact you and how this will impact your business operationally and financially.  

Essentially, get prepared.  

As the bill moves closer to law there will be more to do, but time between the law being agreed and the law being implemented could be short, so you need to be in a position to act quickly.

Key takeaway

There are a lot of changes coming, some of which are actually quite sensible.  

For some employers, it will make little difference - their current policies and practices are largely inline with the Bill. For others it is a really big change.  But for most, we expect costs to go up - and with staff being a large chunk of your P&L, it’s one you want to be prepared for.

Get in touch

As always, if you would like to chat through this or any other item, please get in touch,