UK Employment Law 2024 Year in Review and a Look Forward to 2025 Webinar: Key Takeaways

The UK Employment Rights Bill introduces expanded worker protections, including stronger day-one rights and stricter requirements for preventing workplace harassment. Employers will also need to navigate upcoming national wage reforms, artificial intelligence governance rules, and new EU pay transparency requirements. Meanwhile, evolving diversity, equity, and inclusion standards and regulatory changes in the financial sector and immigration policies may shape workforce compliance in the year ahead.

This LawFlash discusses a number of key takeaways from our UK Employment Law 2024 Year in Review and a Look Forward to 2025 Webinar.

THE EMPLOYMENT RIGHTS BILL

The Bill proposes new and enhanced employee rights, makes provisions regarding pay and conditions in specified sectors, and reforms aspects of trade union conduct and industrial action.

The Bill’s provisions are not expected to come into effect before 2026, and many of the requirements also depend on secondary legislation, the outcome of consultation, and codes of practice. However, it is worth employers being aware of some of the key planned changes to plan for them ahead of 2026. A summary of some of the key changes (amongst others) are set out below:

• Day 1 rights: Employees shall receive new “Day 1” rights, namely be entitled to statutory sick pay, parental, paternity and bereavement leave entitlements, and unfair dismissal protection from the first day of their employment. On the unfair dismissal front, this is a significant difference from the current two-year qualifying service requirement.
• Sexual harassment: The Bill requires employers to take all reasonable steps to prevent sexual harassment rather than just “reasonable” steps. The Bill provides that regulations will be issued specifying what steps are to be regarded as reasonable. In addition, sexual harassment–related disclosures will now also constitute “protected disclosures.” Such disclosures would therefore not be covered by a nondisclosure agreement.
• Flexible working: an application for flexible working can only be refused if it is “reasonable” for the employer to refuse the application on the particular lawful ground or grounds relied upon. An employer’s reliance on one or more of the prescribed grounds does not currently have to be reasonable.
• Collective redundancies: The concept of “at one establishment” is removed from collective redundancy legislation. The threshold at which burdensome collective redundancy obligations is triggered is therefore where 20 or more dismissals are proposed across an entire business, rather than at particular establishments. The relevant obligations will therefore be triggered more often going forward.
• Greater protection for mothers in a redundancy scenario: it will be unlawful to dismiss pregnant mothers through the period of their pregnancy, maternity leave and the six months following return from maternity leave. However, importantly, this will be subject to exceptions which have yet to be explained.
• Fire and re-hire will become harder to do: dismissing an employee who does not agree to a contract variation or to enable the organisation to employ another person, or to re-engage the same employee, under a varied contract to carry out substantially the same duties, will be regarded as unfair dismissal, unless the employer can show that the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business and in all the circumstances the employer could not reasonably have avoided the need to make the variation.
• Trade unions: workers will have the right to receive a written statement of their right to join a trade union. The statement must be given at the same time that they receive their written particulars of employment (i.e., on “Day 1” of employment). Unions will have new rights relating to their ability to access workplaces in order to meet, represent, recruit or organise workers, and to facilitate collective bargaining (but not organising industrial action). Unions will be able to challenge responses before the Central Arbitration Committee.
• Fair Work Agency: The Bill will establish the Fair Work Agency. This agency will bring together existing enforcement functions, have various enforcement powers, and offences will apply with the potential for personal and/or body corporate liabilities.
• Time limits on tribunal claims: The Bill will extend time limits for most employment tribunal claims from 3 months to 6 months following the date of the act(s) complained of.

NATIONAL INSURANCE AND MINIMUM/LIVING WAGE REFORMS

• Significant employer national insurance reforms were announced by the Chancellor in her Autumn 2024 budget, to take effect in April 2025.
• Statutory pay increases to the national living wage and national minimum wage will take effect from April 2025.
• This only adds to the rising costs associated with employing a workforce for employers. With this in mind, we expect employers to undertake further restructures and cost-cutting measures in 2025.

AI IN THE WORKPLACE

• Whilst the use of artificial intelligence (AI) in an employment context is becoming increasingly more common, particularly in relation to the recruitment of employees, but also in relation to other areas such as performance management and training, it is important that employers be cognisant of potential risks of the use of AI in the workplace and ensure sufficient guardrails are put in place to mitigate these risks.
• With the potential for inaccuracies, or unexpected bias as a result of the use of AI, claims for direct or indirect discrimination are possible where an individual with a protected characteristic suffers a particular disadvantage as a result of an algorithm’s output.
• Whilst there is no current legislation specifically regulating use of AI systems exists in the United Kingdom, global employers should also be mindful of obligations they may be subject to under the EU AI Act, or any other legislation globally.
• Generally speaking, the following solutions/principles should be considered by employers when using AI in an employment context:
  • Transparency
  • Human review of AI outputs when certain employment decisions are made, e.g., those relating to dismissal
  • Policies, e.g., AI use policies and a review of existing relevant policies
  • Consider whether adjustments are needed for disabilities
  • Monitoring compliance with data protection requirements
  • Train and upskill employees on use of AI systems
  • Due diligence of third-party AI tools
  • Audit quality of data that AI tools use
  • Regularly review AI tool output to detect discrimination/bias
  • Impact assessments, e.g., algorithmic impact assessments, data protection impact assessments
  • Be able to explain and justify the basis for decisions made by AI tools

EU PAY TRANSPARENCY DIRECTIVE

• 7 June 2026 is the deadline by which member states must transpose the provisions of the EU Pay Transparency Directive into local law.
• The Directive introduces a wide range of pay transparency measures (including, but not limited to, gender pay reporting obligations), extensive enforcement mechanisms, including fines and uncapped compensation for workers who suffer damage as a result of an employer infringing the Directive, as well as obligations for employers with pay gaps of 5% or more to remedy those differences. It applies to all employers operating in EU member states regardless of their size, with certain exceptions.
• The Directive can therefore be said to have more wide-ranging implications than just “transparency”. There is a possibility this will result in much more involvement from workers and/or their representative bodies to discuss and find solutions where pay inequalities may exist, an increased administrative burden in conducting regular equal pay and equal value audits/assessments and potentially greater chances of litigation on equal pay matters, particularly where employee representative bodies encourage this of their members.
• Employers will have to grapple with how such assessments will be run, how data will be gathered and how their compliance strategy will be formulated. This will be important not only from a legal perspective, but also from an employee relations perspective. Even where an employer concludes that any potential pay differences can be objectively justified on a gender-neutral basis, there is a significantly increased risk that a workforce may disagree with the determination and still believe the difference to be unfair, again resulting in an uptick in litigation.
• Each EU member state will transpose the Directive into their own domestic law—meaning final rules for each country are still forthcoming and there is scope for divergence. Further guidance is likely to be published, both at the EU and country level.
• Whilst some of the local rules are still being determined, employers should still be taking steps to prepare now.
• Employers should also keep up to date with common law developments in respect of equal pay. Watch out for the Thandi and others v. Next Retail Ltd EAT decision this year which will revisit an employment tribunal’s decision that found it was breach of equal pay law for the retailer Next to pay warehouse staff a higher rate of basic pay than shop-floor sales staff (who were predominantly women).

DEVELOPMENTS IN DIVERSITY, EQUITY, AND INCLUSION ACROSS INDUSTRIES

• Diversity, equity, and inclusion (DEI) strategies, initiatives and legal requirements still continue to evolve within the UK. However, this contrasts with the United States, where things appear to be heading the other way.
• In the United Kingdom, equality action plans may be required for employers who employ 250+ employees under the Employment Rights Bill.
• UK pay transparency beyond just gender pay gaps may be on the horizon. Post-election, the Labour Government announced an Equality (Race and Disability) Bill in the King’s Speech, to provide for equal pay for ethnic minorities and disabled people and mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees. Calls have also been made to the FCA to make this mandatory for financial services firms.

CHANGES IN BONUSES, BEHAVIOUR, AND DIVERSITY IN THE FINANCIAL SECTOR

• Further reforms to bankers’ bonuses are being considered by regulators in consultation with the Bank of England, which ends on 13 March 2025. Reforms include:
  • Simplifying the Material Risk Takers (MRT) identification process and removing the need for regulator approval of MRTs
  • Relaxing restrictions on variable remuneration
  • Removing the Financial Conduct Authority (FCA) rules on remuneration buy-outs, to align them with the Prudential Regulation Authority (PRA)
  • Making several changes to link the accountability regime more closely to the remuneration regime
• The FCA and PRA Policy Statements on their D&I proposals, following consultations which closed in 2023, are still outstanding and are expected in 2025. The core proposals focus on requiring qualifying companies to produce D&I strategies with specific criteria, D&I targets, data reporting and disclosure. It is important for employers in the Financial Sector to be on the lookout for the publication of these statements and potential new requirements on the horizon.

NEW DUTY TO PREVENT SEXUAL HARASSMENT

• A new positive duty to prevent sexual harassment came into force in October 2024 and requires employers to take “reasonable steps” (although this may become “all” reasonable steps under the Employment Rights Bill) to prevent unwanted conduct of a sexual nature that has the purpose or effect of violating a person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that individual. Importantly, the duty is anticipatory.
• The Equality and Human Rights Commission (EHRC) has updated its technical guidance to provide examples of what measures would be considered reasonable under the new duty. It also provides the following eight-step plan for employers:

1. Develop an effective anti-harassment policy
2. Engage with staff
3. Assess and take steps to reduce risk in the workplace
4. Reporting
5. Training
6. What to do when a harassment complaint is made
7. Dealing with harassment by third parties
8. Monitor and evaluate employer actions

• It is important to be aware that the duty extends not only to preventing worker-on-worker harassment, but also harassment by third parties.
• Employers should ensure they are taking steps to ensure compliance with this duty. If the employee is successful in a tribunal claim in relation to sexual harassment and the new duty has been breached, it is possible that an uplift to compensation payable of up to 25% may be awarded. If an employer does not comply with the new duty, EHRC has the right to investigate, issue an unlawful act notice, enter into an agreement with the employer regarding future acts, and request an injunction.

IMMIGRATION

The roll-out of the UK Electronic Travel Authorisation (ETA) and the EU European Travel Information and Authorisation System (ETIAS) represent a major shift in the entry processes into the UK and the EU and will have significant implications for business travellers.

These schemes change how people plan their journeys and highlight the importance of proper planning and compliance. With the introduction of new administrative requirements, individuals must carefully navigate these new requirements to ensure smooth travel and avoid disruptions to important engagements.

The ETA

The ETA grants permission to travel to the UK—similar to the US Electronic System for Travel Authorization (ESTA).

From 2 April 2025, an ETA will be a mandatory requirement for all visitors to travel to the UK. This includes those coming for tourism, transit, visiting family and friends, business, short-term study, or for up to three months on the Creative Worker visa concession. It also applies to people travelling to the UK for a permitted paid engagement.

The ETA is not required for those holding a UK visa, those with permission to reside to live, work, or study in the UK, or for British or Irish nationals.

The scheme has been live since October 2023. The roll-out dates are as follows:

• Non-European Nationals: Since 27 November 2024, eligible non-European nationals have been able to apply for an ETA for travel to or transit through the UK. This became mandatory from 8 January 2025.
• European Nationals: From 5 March 2025 eligible European nationals can apply, and this will become mandatory from 2 April 2025.
• Universal Requirement: From April 2025, all travellers to the UK (except British and Irish citizens) will need either an ETA or an eVisa to enter the UK.

Applying for an ETA

The application can be made online or on a mobile device using the UK ETA app. Applicants scan their passport, take a photograph of themselves, and complete a questionnaire with personal details, previous immigration history, and details of any criminal convictions and any adverse immigration history.

An ETA currently costs £10, although this is set to rise to £16 soon and payment is accepted by card.

It is recommended to apply as soon as possible. Many applications are being processed immediately with automated checks. However, where manual checks are needed, the processing time will be longer.

It is possible for someone to assist with the application, such as a legal representative. However, the applicant must be physically present as they will be required to take a live photograph of themselves as part of the application.

After Applying

Travellers will receive an email confirming once the application has been processed. The ETA will be linked to the passport that the traveller applied with.

An ETA is valid for two years, or until the passport expires, whichever is sooner. If a new passport is obtained, a new ETA will be required.

It is possible to travel to the UK as many times as the traveller wants whilst holding an ETA, and a traveller can enter for up to six months each time. However, it should be noted that the ETA is not a visa and does not grant the right to live or work in the UK. Visitors are still bound by the visitor visa rules and must comply with these regulations. Those needing to work in the UK must obtain the appropriate visa before traveling.

The ETIAS Travel Authorisation

Like the UK’s ETA, the ETIAS scheme is the EU’s travel authorisation. ETIAS is expected to roll out in the second half of 2025.

Travellers from over 60 visa-exempt countries, including the UK, US, and Canada, will be required to have an ETIAS travel authorisation to enter 30 European countries for a short stay up to 90 days in any rolling 180-day period. Holders of valid Schengen visas will not require an ETIAS travel authorisation.

Visitors must comply with the national rules regarding permitted activities for their trip to the respective country.

Applying for an ETIAS Travel Authorisation

To apply, travellers will need a valid travel document, e.g., a passport, which should not expire in less than three months, and it should not be more than 10 years old.

Applicants will be required to submit personal information and details of their trip before being granted entry approval. They must also include details about any criminal convictions, any past travel to war or conflict zones, and whether they have recently been subject to a decision requiring them to leave the territory or any country.

A payment card will be required to cover the €7 application fee.

It will be possible for someone, such as a legal representative, to assist with the application.

After Applying

Once an application for the ETIAS travel authorisation is processed, applicants will receive a confirmation email. They should verify that the authorisation has been correctly issued.

Most applications are processed within minutes, though some may take longer if additional checks are required. In such cases, applicants should receive a decision within four days, and if further documents or an interview are needed, processing can take up to 30 days.

The ETIAS will be linked to the traveller’s passport and remain valid for three years or until the passport expires, whichever comes first. However, the ETIAS does not guarantee entry; upon arrival, border guards may request to see the passport and ask about the purpose of the trip to ensure entry conditions are met.

Conclusion

The roll-out of the ETA and ETIAS systems mark significant changes for travellers who previously entered the UK and Schengen countries without any formal process or permission. For employers, this shift could impact business operations, as the process adds more complexity in managing the business travel arrangements of employees. As entry into the UK and Schengen countries becomes more regulated, businesses must stay informed and prepared to navigate these changes, ensuring compliance with the new requirements.

KEY ISSUES FACING GLOBAL EMPLOYERS

Legal and regulatory changes, sanctions risks, changing attitudes, increasing costs and political stability are all key issues which continue to directly or indirectly impact the day-to-day operations of employers. With many factors having knock on effects on other factors, employers must continue to adapt to the ever-changing needs.

LOOK FORWARD TO 2025

In addition to further developments with respect to the Employment Rights Bill and its associated consultations, the following developments are also on the horizon in 2025:

• Neonatal Care (Leave and Pay) Act 2023: Expected to come into force from 6 April 2025, the Act will give parents a right to 12 weeks’ leave and pay when their baby requires neonatal care, in addition to existing parental leave entitlements (such as maternity or paternity leave). The entitlement will be a ‘day 1’ right and applies to parents of babies who are admitted to hospital for at least seven full days of medical/palliative treatment, within the first 28 days from birth.
• New Failure-To-Prevent-Fraud Offence: On 1 September 2025, a new “failure-to-prevent-fraud” offence for large companies will come into force under the Economic Crime and Corporate Transparency Act (ECCTA) 2023. Large organisations may be held criminally liable where an employee, agent, subsidiary, or other “associated person,” commits a fraud intending to benefit the organization.
• Case law developments: some interesting case law developments are on the horizon in 2025, including with respect to equal pay and what constitutes a “woman” for the purposes of the Equality Act 2010.