UK quarterly employment update - Summer 2025 | Employment Law

Welcome to the Summer 2025 edition of our quarterly UK employment update.

In this edition we look back at notable events from the second quarter of the year, as well as provide shorter and longer-term forecasts for what lies ahead.

April to June 2025 – a backward glance
Development	Impact on employers
New NMW rates apply from 1 April 2025, including the NLW for those aged 21 or over rising from £11.44 to £12.21 per hour and the NMW for 18-20 year olds up 16.3% from £8.60 to £10 per hour.	The latest increases reflect the recent change to the way NMW rates are set, with the Low Pay Commission (LPC) now factoring in the cost of living when confirming new rates each year. In addition, the LPC is required to narrow the gap with the NLW, taking steps year by year in order to achieve a single adult rate. As rates increase, so does the risk of NMW breaches - see our webinar and common pitfalls briefing. Employers should also note reforms proposed under the Employment Rights Bill (ERB), which give a new enforcement body (the Fair Work Agency) powers to enforce NMW underpayments, as well as bring ET proceedings in place of workers and to provide legal assistance in certain circumstances.
A new right to statutory neonatal care leave and pay came into force on 6 April 2025. This provides up to twelve weeks' leave and pay for eligible employees with a child receiving seven or more continuous days' neonatal care, starting within 28 days of birth. For further details, see our briefing.	Employers should amend existing, or introduce new, neonatal or family leave policies and procedures. They should also review whether to amend the statement of terms of employment in relation to paid leave. Additional changes to statutory family leave rights are also included in the ERB, including a new right to unpaid bereavement leave, extending dismissal protections for new parents and more (read our briefing).
The government has launched a call for evidence on several key areas of equality law and practice and which closed on 30 June 2025 (read our briefing). The call for evidence will, together with the outcome of a consultation on mandatory ethnicity and disability pay gap reporting (read our briefing), inform the measures to be included in the Draft Equality (Race and Disability) Bill. The Bill will establish the legal framework for the new pay gap reporting requirements and the extended equal pay protections.	The Equality (Race and Disability) Act is anticipated to come into force in 2026 and there is likely to be a transition period to allow employers to get ready for the change. Employers with 250 or more employees should prepare to invest time and resources in assessing and understanding the new ethnicity and disability pay reporting duties. Advance work on data collection and understanding of pay gaps will be required to ensure compliance. In addition and regardless of workforce numbers, all employers should be taking steps to properly understand pay practices and identify any pay differentials, including establishing the causes of any significant pay differences, assessing justification and establishing a plan to address any differences that cannot be justified on non-discriminatory grounds.
On 16 April 2025, in For Women Scotland v The Scottish Ministers the SC held that the words “sex” “woman” and “man” in the EqA mean biological sex, biological woman and biological man. On 25 April the EHRC published an interim update on the practical implications of the decision. A consultation ran from 20 May to 30 June on updates to the EHRC’s Code of practice for services, public functions and associations (“Services Code”) to reflect the decision.	The decision of the SC has a number of practical implications for employers, including but not limited to the provision of single-sex facilities and services. Employers should take advice on the impact of the SC’s judgment on their policies and practices. The current consultation on the Services Code does not include updates to the EHRC’s Employment Code of Practice, which contains statutory guidance for employers. The EHRC has confirmed that it will update this separately and in due course, but has not given any specific timescales.
The CA held that a worker’s part-time status must be the “sole reason” for any less favourable treatment. In Augustine v Data Cars Limited a part-time private hire driver was charged the same weekly circuit fee as a full-time comparator. Dismissing the appeal, the CA held that there was no breach under the PTW Regs as his treatment was not “solely” on the ground he worked part-time. It had been anticipated that the CA might depart from the “sole reason” test; however it did not consider that it was able to do so as it was bound by earlier case law.	The “sole reason” test makes it more difficult for part-time workers to prove less favourable treatment than in other areas of discrimination law. The CA granted permission to appeal to the SC and employers will want to monitor the case closely in anticipation of potential new guidance from the SC on the treatment of part-time workers.
Recent immigration developments include: the government’s published Immigration White Paper; changes to the Immigration Rules for Skilled Workers; increases to UK visa and immigration application fees; proposed extension of the right to work (RTW) checks to non-traditional working arrangements; the launch of a new platform for verifying overseas qualifications and English language proficiency (Qualification and Language Service (QLS)); and more. Read our May edition of our Immigration round-up for details.	The Immigration White Paper proposes major changes to the UK immigration system and employers should be prepared to respond to change over the coming months (more on this below) as the proposals are consulted upon and implemented. In relation to other recent changes, employers should check updates to the Immigration Rules to ensure for continuing compliance and be aware of the proposed changes in respect of any RTW checks.
The ICO has announced a new AI and biometrics strategy which includes proposals to develop a new statutory code of practice for organisations developing or deploying AI and automated decision-making. It also plans to ensure that automated decision-making systems are governed and used fairly in recruitment and public services.	AI can bring real benefits but may also introduce legal, employee relation and reputational risks if it is not used lawfully and fairly. The ICO’s announcement signals increasing regulatory activity relating to AI use and employers should watch closely for further details as the ICO implements its proposals over 2025/6. In the meantime, to reduce legal and commercial risks when implementing new AI technologies, employers should continue to: carry out risk assessments and testing, update HR policies, consider workforce messaging (including any potential information and consultation obligations), conduct risk training and update learning and development programmes. Read our briefing on how HR teams can play a key part the in roll out of AI and see details of our virtual training module taking place on 23 September 2025 on AI and UK HR: innovation and compliance.
July to September 2025 – short-range forecast
Development	Impact on employers
The ERB will make its way through the final stages of parliament and is anticipated to receive Royal Assent in autumn 2025, although this is still to be confirmed. The government has published a roadmap, setting out an anticipated timeline for the Bill’s measures to come into force (read our briefing). Changes which will commence immediately upon Royal Assent, or two months later, include some industrial action reforms (read our Labor law update for more details). Further measures will be implemented over 2026 and 2027 (see below for more details). It has also added some ERB amendments, including significant changes to measures on zero/low hours, “fire and rehire”, NDAs and bereavement leave (read our briefing). Separately, the government has also launched a review of the entire family leave and pay system which is expected to run for 18 months and has published a call for evidence. This is likely to lead to further reform, in addition to those family leave changes already in the ERB.	Although the government has been clear to date that the ERB will be implemented in stages, the roadmap is the first time the government has provided more detailed timescales for commencement. This will enable employers to make more focused preparations, particularly for those measures commencing in 2025 and early 2026. The government will also start consulting on the detail of some of the measures to come, with some consultations beginning as early as this summer 2025. Employers should check our tracker for updates and implementation timescales.
On 1 July, the government announced a statement of changes to the Skilled Worker and other routes, implementing the first phase of its Immigration White Paper reforms, and which are due to come into effect on 22 July 2025 (read our briefing). In addition, the Home Office has updated its guidance to confirm that from 15 July 2025, applicants for entry clearance under study and work routes may no longer receive a visa vignette in their passport. Instead, they will need to create and access a UKVI account before travelling to the UK. This change does not apply to dependants or applicants for other immigration categories, who will continue to receive a vignette.	The announced changes to the Skilled Worker and other routes from 22 July 2025 reflect a fundamental shift in how UK businesses can utilise overseas talent and employers should urgently review their recruitment plans and any existing pipeline plans for sponsorship, to minimise their impact. With regards to the visa vignette changes, this means adjusting onboarding processes to ensure applicants complete the new digital steps prior to travel. Since there will be no physical vignette to confirm entry, sponsors may also need to request alternative evidence of entry—such as boarding passes or travel confirmations— to verify when a new hire has landed in the UK.
The Economic Crime and Corporate Transparency Act 2023 will, in broad terms, introduce a new offence from 1 September 2025 under which large employers may be criminally liable where an employee, among others, commits a fraud intending to benefit the employer (or, in some circumstances, to benefit a client) and the employer did not have reasonable fraud prevention procedures in place. Read our update.	The aim of the offence is to encourage more organisations to implement, or improve, fraud prevention procedures. Employers should refer to the Home Office’s statutory guidance when developing or updating their fraud prevention policies as the courts will ultimately take adherence to this guidance into account when considering cases.
October 2025 to March 2026 – long-range forecast
Development	Impact on employers
The Victims and Prisoners Act 2024 will make any confidentiality clause (often referred to as an NDA) signed on or after 1 October 2025 void if it seeks to prevent a victim (or a person who reasonably believes they are a victim) from making certain disclosures of information to specified groups/persons for specified purposes, as set out within the Act. This includes for example disclosures to victim support services, or a victim’s close family, for the purposes of obtaining support in relation to the relevant conduct. See further guidance here.	Employers will need to review the wording of any confidentiality clauses, including within template settlement agreements, to assess whether updates are required. Employers should also consider training line managers and HR teams involved in settlement agreement negotiations to ensure that appropriate NDAs are used, depending on the circumstances. Note also NDA changes included in the Employment Rights Bill (above).
The government will continue to implement significant immigration reforms. Specifically, its Immigration White Paper proposes several key changes that will affect the Skilled Worker route. These include raising the English language requirement for Skilled Workers; and increasing the Immigration Skills Charge. Further, the White Paper also proposes extending the standard qualifying period for Indefinite Leave to Remain from five to ten years for migrants who are sponsored under the Points-Based System and their dependants.	While timelines for implementation remain unconfirmed, employers should begin reviewing their recruitment pipelines, budget forecasts, and existing sponsored populations to prepare for the likely impact.
On 18/19 November 2025, the CA is due to hear an appeal in Groom v Maritime and Coastguard Agency on the issue of volunteer status. The EAT held that a volunteer coastal rescue officer was a “worker” rather than a volunteer. A particular factor of relevance was that he received payment for work done. It was irrelevant that: (i) payment was claimed by volunteers after working, rather than receiving payment automatically (ii) claiming pay was optional and some volunteers did not do so.	The case is relevant to those employers who engage volunteers. Employers will be keen to see if the CA issues further guidance to support employers in ensuring that any volunteer arrangements do not inadvertently risk becoming worker contracts.
The government will continue to implement the ERB, in line with the anticipated timescales set out in its roadmap (read our briefing). A number of consultations are due to take place in autumn 2025 and early 2026 including: day-one unfair dismissal; “fire and rehire”; new zero and “low hours” worker rights; rights for pregnant workers; some trade union measures; collective redundancy; and more.	Employers will be keen to see further details emerge as various consultations commence and run over 2025-26, to support their preparations. Employers should prioritise preparations for those measures anticipated to take effect in 2025 and early 2026 including: day-one rights to paternity and unpaid parental leave; SSP changes; the establishment of the Fair Work Agency; whistleblowing protections; simplifying the trade union recognition process making it easier for trade unions to apply for and gain collective bargaining rights; doubling of the maximum protective award period in a collective redundancy consultation scenario; and electronic and workplace balloting. To keep up with the latest developments, please see our tracker and look out for details of our Employment Rights Act 2025 conference, planned for autumn 2025.
Sustainability standards (including ESG - Environmental, social and governance) assess an employer’s impact on the environment and people, including on workers. This is an evolving landscape and key themes include regulatory challenges, supply chain due diligence, reporting requirements, worker protection, and more. They include new obligations on employers to report publicly on workforce metrics and action plans, and to be pro-active in identifying and addressing human rights risks in supply chains.	Other jurisdictions have acted to regulate and UK employers need to be aware that they may fall directly within scope (some have extra-territorial application), or indirectly through supply chains. This includes the EU’s ban on the sale, import and export of goods made using forced labour and a Sustainability Omnibus proposal which is aimed at amending recently agreed reporting and due diligence legislation. Read our update.

NB. Employment law is a devolved matter in Northern Ireland (NI) and the issues set out above may not all apply in NI. For NI specific advice contact our Belfast office.

Key to abbreviations:

CA - Court of Appeal
EHRC - Equality and Human Rights Commission
ET - Employment Tribunal
EqA - Equality Act 2010
EAT - Employment Appeal Tribunal
ICO - Information Commissioner’s Office
NDA - Non-Disclosure Agreement
NLW - National Living Wage
NMW - National Minimum Wage
PTW Regs - Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000

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