Looking ahead to 2025: Employment and Pensions Law developments

Increase in National Minimum Wage

From 1 April 2025, the National Living Wage and the National Minimum Wage will increase as follows:

• National Living Wage (workers aged 21 and over) from £11.44 per hour to £12.21
• Aged 18-20 from £8.60 per hour to £10.00
• Aged 16-17 from £6.40 per hour to £7.55
• Apprentice rate from £6.40 per hour to £7.55

The 16.3% increase in the rate for those aged 18 to 20 is the largest increase ever. It is intended to narrow the gap with the NLW because it is expected that the adult rate will be extended to 18-year-olds in the future. The Low Pay Commission is likely to consult on how to achieve this in 2025.

As always, employers should audit their workforce regarding the ages of their staff and payroll or payroll providers will need to be informed of the details of those benefitting from any increases to ensure that the new rates are paid.

Gender pay gap reporting

The deadline for reporting and publishing is 4 April 2025 in the private and voluntary sector (30 March 2025 for the public sector).  

ONS statistics published on 29 October 2024, showed that over the last decade, the gender pay gap has fallen by approximately a quarter among full-time employees. In April 2024, it was 7.0%, down from 7.5% in 2023. The gender pay gap is larger for employees aged 40 and over than those aged under 40 and is larger among high earners than among lower-paid employees.

Increase in statutory rates

On 6 April 2025:

• The weekly rate for statutory sick pay will increase from £116.75 to £118.75
• The weekly rate of statutory maternity, adoption, paternity, shared parental and parental bereavement leave pay will increase from £184.03 to £187.18 or 90% of the employee’s average weekly earnings if this is less than the statutory rate

The lower earnings limit will increase from £123 per week to £125.

National insurance contributions

In the autumn budget of 30 October 2024, it was announced that from 6 April 2025, the rate of employers’ NICs will increase from 13.8% to 15%. In addition, because of the lowering of the earnings threshold, employers will pay NICs on employee earnings from £5,000 rather than £9,100.

New Employment Tribunal limits

At this stage, we do not have the details of the new limits on statutory redundancy pay and Employment Tribunal awards which are expected to come into force in April 2025. Statutory redundancy pay is calculated taking into account length of service, the employee’s age and weekly pay which is subject to a statutory cap, currently £700.

Neonatal care and leave

We have been writing about neonatal leave for a while and the Neonatal Care (Leave and Pay) Act 2023 (a measure of the previous Government) is expected to come into force in April 2025. There is no implementation date at the moment and we are still waiting for Regulations with the final details.

The Act introduces a day-one right for employees to take up to 12 weeks leave where a neonate, (a baby who is 28 days old or less) is admitted to hospital for care for seven continuous days or more. This right applies to each parent separately. It also introduces an entitlement to statutory neonatal pay where the employee meets service and earnings criteria, which is expected to be 26 weeks of continuous service and the lower earnings limit. The right to leave will be in addition to maternity, adoption, paternity and shared parental leave.

Employers will need to prepare a neonatal leave policy once the full details are known unless of course they already provide for neonatal leave and pay.

Section 199 of the Economic Crime and Corporate Transparency Act 2023 provides that an organisation may be criminally liable where an employee, agent, subsidiary or other associated person commits a fraud offence intending to benefit the organisation. It does not need to be demonstrated that the directors or senior managers of the organisation ordered or knew about the fraud. The failure to prevent fraud offence will come into force on 1 September 2025.

Relevant organisations will have a defence under the Act if they have reasonable procedures in place to prevent fraud, or if they can demonstrate, to the satisfaction of the Court, that it was not reasonable in all the circumstances to expect the organisation to have any prevention procedures in place.

On 6 November 2024, the Government published guidance for organisations about the new offence and this states that the fraud prevention framework, put in place by a relevant organisation, should be informed by six key principles: top level commitment, risk assessment, proportionate risk-based prevention procedures, due diligence, communication (including training) and monitoring and review.

We are still waiting for an important judgment from the Court of Appeal in the case Higgs v Farmor’s School. The case was heard on 2 October 2024.

Mrs Higgs, a Christian, worked as a pastoral administrator and work experience manager. She was dismissed for gross misconduct for breaching the school’s Code of Conduct after a parent complained about a Facebook post and said that Mrs Higgs held homophobic and prejudiced views against the LGBT community.

Mrs Higgs’ claim of direct discrimination and harassment on the ground of religion or belief was dismissed by the Employment Tribunal. Her beliefs (including gender – critical views) were protected under the Equality Act 2010. However, she had not been dismissed for holding these views but because of the language used on Facebook and because people reading those posts would reasonably believe that Mrs Higgs held homophobic and transphobic views.

Mrs Higgs appealed to the EAT and her appeal was upheld in part. The Employment Tribunal had failed to consider whether there was a sufficiently close nexus between Mrs Higgs’ protected beliefs and whether the social media posts should be viewed as a manifestation of her beliefs. It had not then considered the issue of proportionality regarding interference with the manifestation of her beliefs. The EAT remitted the case back to the Employment Tribunal. Mrs Higgs appealed to the Court of Appeal on the basis that the case should not have been remitted but should have been decided in her favour at EAT level.

The Equality and Human Rights Commission has commented that:

“We expect this landmark case will set a precedent for future cases concerning protected beliefs in the workplace, especially where those beliefs intersect with other protected characteristics. This case is also significant because it will help establish how employers can respond, without discriminating, to what appears to be an increasingly common phenomenon: a third-party complaint where an employee has published their personal views on a social media platform.”

As for forthcoming hearings note the following.

Sullivan v Isle of Wight Council

Miss Sullivan, an external candidate, had two unsuccessful interviews with the Council in October and December 2019. She complained to the police alleging verbal harassment during the interviews. She also complained to the Council but its subsequent investigation found that there had been no wrongdoing and it refused to allow an internal appeal against that decision. Miss Sullivan complained to her MP about the interviews and alleged financial irregularities by one of the Council’s employees involved in the operation of a trust and she also told the Council about this.

Miss Sullivan brought a whistleblowing claim to the Employment Tribunal on the basis that she had suffered a detriment (the refusal of the internal appeal) because of the protected disclosures she had made about the alleged financial irregularities. She was not a “worker” but argued that the whistleblowing protections should be extended to her as a job applicant.

Following a preliminary hearing, the Employment Tribunal said it had no jurisdiction to hear the claim. Miss Sullivan was not in an analogous situation to an internal applicant (a job holder) or to an NHS applicant for which there were specific whistleblowing provisions. The EAT upheld that decision and the Court of Appeal will hear the appeal on 18 or 19 February 2025.

Augustine v Data Cars Ltd

Mr Augustine was a private hire driver and Data Cars imposed a weekly flat rate circuit fee of £148 which gave all the drivers access to its database. Mr Augustine was a part-time driver working around 34 hours a week and the full-time comparator driver worked over 90 hours. Mr Augustine brought a claim on the basis that the flat rate circuit fee, paid by all drivers, meant he was treated less favourably when compared to a full-time driver. The Employment Tribunal rejected his claim. He had been treated in exactly the same way as a comparable full-time driver and so, had not been treated less favourably. In the alternative, it found that even if Mr Augustine could establish less favourable treatment, he was not charged the circuit fee solely because he was a part-time worker.

His appeal to the EAT was upheld in part. On a pro rata basis, Mr Augustine was paying a higher circuit fee than his full-time comparator when taking it into account as a proportion of his hours worked. This meant his take home pay was less once he had paid the circuit fee.  However, the EAT was bound by a Scottish Court of Session decision and because Mr Augustine’s less favourable treatment was not solely because he worked part-time (the “sole reason” test) there was no breach of the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000. The Court of Appeal will hear Mr Augustine’s appeal, before 7 July 2025.

Miller v University of Bristol

Dr Miller was Professor of Political Sociology and said that he had been subject to an organised campaign by groups and individuals opposed to his anti-Zionist views, the aim of which was to have him dismissed. He alleged that the University had not supported him and he was in fact dismissed for gross misconduct because of comments he had made.

Dr Miller brought various claims including for direct belief discrimination and unfair and wrongful dismissal. He argued that his anti-Zionist beliefs qualified as a protected philosophical belief under the Equality Act 2010. The Employment Tribunal agreed that those beliefs qualified as a philosophical belief and as a protected characteristic under the Act. It held that the decision to dismiss constituted direct discrimination against Dr Miller because of his philosophical belief. Further, the dismissal was unfair because the University acted unreasonably in treating Dr Miller’s conduct as a sufficient reason for dismissal and the reason for dismissal was tainted by discrimination. The wrongful dismissal claim also succeeded because Dr Miller had been dismissed without notice and pay.

The University’s appeal is to be heard by the EAT by 12 November 2025.

In addition to the developments outlined above, there are other key topics employers need to be aware of because they will still continue to be as relevant in 2025, as they were in 2024.

Hybrid working  

Although home and hybrid working remain prevalent, there is increasing scrutiny and shifting employer expectations about the practices. There is a move towards more structured office attendance by many organisations through implementing office-working policies. Although office attendance has increased slightly compared to recent years, it remains significantly lower than pre-Covid times. Hybrid working models continue to dominate, with employees balancing home working and office days. Fewer than one in five UK organisations are setting mandatory in-office days, according to the latest Hybrid Working Index from global workplace management consultancy, AWA.

The key findings from the AWA report include:

• Only 18% of UK organisations are undertaking in-office days, a 21% decrease since July 2022 and the most popular approach by employers is no policy at all (65%), followed by employee choice (18%), and mandates of at least one in-office day (18%)
• Average weekly attendance in UK offices has risen only slightly since July 2022, from 29% to 33%

• Just 13% of UK organisations are still considering downsizing their office space, signalling that the post-pandemic rush to reduce office-space may have stabilised

Employers need to balance return-to-office initiatives with the need to remain competitive for attracting and retaining talented employees. Flexible arrangements and clear policies are critical to navigate this transition back to office working. Clear communication around expectations will be essential for maintaining productivity and morale amongst employees.

The issue is likely to remain high-profile in 2025.

On 11 December 2024, it was reported that Metropolitan Police support staff voted overwhelmingly for industrial action after managers stated they wanted to reduce the amount of time staff could work from home. The Public and Commercial Services Union said that the change disproportionately impacts women, part-time workers and those with disabilities.

The case of Wilson v The Financial Conduct Authority (Employment Tribunal 2024) attracted a lot of media interest and highlighted the challenges surrounding hybrid working arrangements. In this case, the FCA denied an employee’s flexible working request to work from home full-time. The Employment Tribunal held that the FCA gave clear and cogent evidence about why it rejected the request for full-time homeworking and why it required in-office attendance from its employees (for some of the time) for business needs.

As this case demonstrates, many employers cite fostering collaboration, improving office culture, enhancing teamwork and maintaining performance as reasons for returning to the office.

For further information about the Wilson case see our article Wilson v FCA.

Artificial Intelligence

Increasing use of AI in HR functions, particularly during recruitment, is inevitable but employers must be aware of the potential legal risks of using AI including discrimination and the impact on individuals’ privacy and information rights.

On 6 November 2024, the Information Commissioner’s Office (ICO) published a comprehensive report on using AI tools in recruitment. The ICO carried out consensual audit engagements with developers and providers of AI powered sourcing, screening, and selection tools used in recruitment.

The ICO found that while many providers monitored the accuracy and bias of their AI tools and took action to improve them, in some cases there was a lack of accuracy testing. Also, there was a risk of discrimination when using some tools where a search functionality filtered out candidates with certain protected characteristics. Another concern for the ICO was that too much personal information was collected.

The ICO made seven key recommendations to ensure AI recruitment tools comply with UK data protection law. These included the issues of fairness, data minimisation and data protection impact assessments. Note that in March 2024, the previous Government published guidance Responsible AI in Recruitment.

ICO AI in Recruitment

Responsible AI in Recruitment

Get Britain Working

On 26 November 2024, the Government published its wide-ranging policy document Get Britain Working. The Government is committed to “building an inclusive and thriving labour market where everyone has the opportunity of good work, and the chance to get on at work”.

The Government is concerned that 2.8 million people are out of work due to long-term sickness and the most prevalent conditions are mental health, musculoskeletal and cardiovascular disease.

Chapter 3 of the policy document focuses on interventions to prevent economic inactivity due to ill health. This looks at issues such as increasing workforce participation through improving the health of the population and supporting employers to promote healthy workforces and to recruit and retain workers with a health condition or disability. Chapter 3 also looks at reforms of the health and disability benefits system.

There will be an independent review into the role of employers in creating and maintaining healthy and inclusive workplaces following which there will be practical recommendations that support employers to:

• Improve recruitment and retention of disabled people and people with health conditions
• Prevent people becoming unwell at work and better support good, healthy workplaces
• Undertake early intervention for sickness absence and increase returns to work

The review will run through to summer 2025.

Although the focus of Chapter 3 is on the actions the UK government will take in England, it will work closely with the devolved Governments.

Get Britain Working

The Draft Equality (Race and Disability) Bill

The Draft Bill was announced in the King’s Speech on 17 July 2024 (alongside the Employment Rights Bill). The aim is to tackle inequality for ethnic minority and disabled people by:

• Enshrining in law the full right to equal pay for ethnic minorities and disabled people to make it easier for them to bring unequal pay claims
• Introducing mandatory ethnicity and disability pay reporting for larger employers (250 or more employees) which will expose any pay gaps and enable organisations to consider why such pay gaps exist and how to tackle them

The Draft Bill was referred to in the “Next Steps” document which sets out the Government’s longer-term plans. There will be consultation on the Draft Bill but there are no further details at the moment.