Top 5 issues for HR in 2025

This is our selection of the key issues we think will be significant for employers, HR professionals and in-house lawyers during 2025.

Also see our update, UK workplace law changes in 2025, on the employment law changes that will be introduced in 2025.

We explore the issues we believe will be particularly significant for employers in the UK in the coming months: 

1. Redundancies, restructuring and terminations
2. Workplace culture and behaviour
3. Diversity equality & inclusion and Family friendly rights
4. Wellbeing and mental health
5. Artificial Intelligence (AI)

With the recent implementation of the new duty to prevent sexual harassment and the Employment Rights Bill (the Bill), which is set to introduce significant legislative changes over the next few years, staying ahead of compliance requirements will be a top priority for employers. This will be of greater importance given that the proposal to extend the time limit for bringing all employment tribunal claims from three to six months is likely to lead to an increase in tribunal claims. 

In relation to these top 5 issues for employers this year, we set out the planned reforms, many of which are expected to come into force in 2026, and the steps employers should consider taking to prepare for these changes – as well as key upcoming decisions.
 

   1. Redundancies, restrucuring and terminations

Some of the most significant changes in the Bill include “ending “exploitative” zero hours contracts and fire and rehire practices”, changes to the rules around collective consultation, new trade union rights and establishing day one rights to unfair dismissal protection, which will give many more people the right to claim unfair dismissal and could lead to a rise in employment tribunal claims. 

The effect of the upcoming reforms, and the increase in employer national insurance contributions from 6 April 2025, may lead some employers to consider redundancies and restructuring.

• Unfair dismissal protection from day one
• Fire and rehire restrictions
• Collective consultation: redundancies and "fire and re-hire"
• Trade unions and industrial action
• Outsourcing of public services & TUPE
• Zero hour contracts

Unfair dismissal protection from day one

The Bill introduces the right for employees not to be unfairly dismissed from their first day of work – with the current two-year qualifying period being scrapped. Employers will be able to use probationary periods to assess the suitability of new hires, with a lighter touch dismissal process during this time, although this does not appear to apply to redundancy dismissals.

This major change will be effective no earlier than Autumn 2026.

What should employers do?

When further details become available:

• Review your contracts to ensure they have clear and flexible probationary periods in line with the new rules
• Update your probation policy
• Tighten up your recruitment and capability/ performance management processes, particularly during and towards the end of probationary periods
• Train managers on effective performance management during probationary periods

Unfair dismissal cases - Court of Appeal decisions to look out for in 2025:

• Charalambous v National Bank of Greece: whether a misconduct dismissal was fair where the decision to dismiss was taken by a manager who did not conduct the disciplinary hearing
• Hewston v Ofsted: whether an employee was unfairly dismissed for misconduct they had not been specifically forewarned would lead to summary dismissal

Fire and rehire restrictions

It will be an automatically unfair dismissal to dismiss an employee for refusing to agree to a variation to their employment contract. It will also be automatically unfair to dismiss an employee to replace them with another person, or re-engage the employee, under a varied contract to carry out substantially the same duties.

There will be a very narrow exception to this, that businesses can “restructure to remain viable” which is likely to be difficult to satisfy in practice.

What should employers do?

• Ensure that contracts for new starters are drafted with flexible provisions
• Consider incorporating variation clauses into your employment contracts to give more scope to vary contracts without seeking employees’ agreement - but we would recommend seeking advice on this.

Collective consultation: redundancies and “fire and re-hire” 

The planned changes to collective consultation rules include requiring collective consultation, and the duty to notify the Secretary of State on the HR1 form, where an employer plans to dismiss as redundant at least 20 employees across the entire business (instead of, as currently, just at one particular site) within 90 days or fewer.

Other proposed reforms, set out in a consultation which closed in December 2024, are to:

• Increase the maximum protective award (this can be awarded by tribunals where employers fail to meet their obligations to consult collectively) either by doubling the award from 90 to 180 days’ pay per affected employee or by removing the cap on the protective award 
• Allow employees to claim interim relief (to preserve the employee’s pay until the tribunal hearing)

What should employers do?

• Look out for a further consultation, expected in 2025, on doubling the length of the consultation period when an employer is proposing to dismiss 100+ employees - from 45 to 90 days
• Update your redundancy policy
• Review how redundancies are communicated across the business to ensure there is a centralised record
• Monitor redundancies across all locations to ensure you comply with obligations to collectively consult and complete HR1 form, which will now be triggered more frequently

Trade unions and industrial action

The government plans some significant trade union reforms over the next couple of years. 

It is expected that during 2025, these requirements will be removed:

• The minimum service levels for certain sectors
• The information and turnout requirements for ballots

The following trade union reforms are expected in 2026:

• Requiring employers to inform workers of their right to join a trade union, alongside the written statements of employment particulars that employers are required to provide to new joiners
• Giving unions greater rights of access to workplaces
• Simplifying the statutory trade union recognition process and reducing thresholds for support

What should employers do?

When further details become available:

• Revise your written statement of particulars and employment contracts
• Put processes in place to remind staff regularly of their right to join a trade union

Industrial action cases to look out for in 2025:

• Court of Appeal decision – Morais v Ryanair DAC: whether protection for employees participating in industrial action extends to any form of authorised industrial action, and is not limited to ‘protected’ industrial action
• EAT decision - Jiwanji v East Coast Main Line Company Ltd: whether a pay offer made directly to staff during collective bargaining negotiations was an unlawful inducement

Outsourcing of public services & TUPE

To avoid a “two-tier” workforce, the Bill provides that private sector employees will need to be employed on terms and conditions no less favourable than the ex-public sector employees who have transferred. In addition, the ex-public sector employees will need to be treated no less favourably than when they worked in the public sector.

What should employers do?

• Look out for the consultation, draft regulations and Code of Practice
• Employers engaged in public sector outsourcings will need to ensure that they have processes in place to ensure that their negotiations and service agreements comply with the new rules and Code of Practice

Zero hour contracts

The government plans for workers on zero or low guaranteed hours contracts who regularly work more hours than their contracts indicate, to be offered guaranteed hours with a contract that reflects the number of hours regularly worked over a reference period (expected to be 12 weeks).

The Bill will also introduce the requirement for reasonable notice of any changes in shifts, with proportionate compensation for any shifts cancelled or curtailed at short notice.

A consultation, which closed in December 2024, sought views on extending these protections to agency workers.

What should employers do?

• Audit your workforce to identify individuals engaged on zero hours or low guaranteed hours contracts
• Review your processes for scheduling rosters and shifts

 

  2. Workplace culture and behaviour

Sexual harassment in the workplace is an important ongoing issue. Taking proactive steps to prevent these issues arising will not only help employers comply with harassment laws, and any regulatory obligations they have, but will also help with ensuring an inclusive drives to an inclusive and positive workplace culture. In addition, heightened expectations for a positive workplace culture and a diminished tolerance for poor behaviour mean that employers that neglect to prepare for the significant upcoming changes to harassment laws could face an increase in claims.

Additional proposed workplace culture reforms include a new "right to switch off" and making flexible working the “default where practicable” which, rather than giving workers an absolute right to work flexibly, is more of an evolution towards more flexible working.

• Harassment and sexual harassment
• Strengthening flexible working
• Right to switch off
• Whistleblowing cases - Court of Appeal decisions to look out for in 2025

Harassment and sexual harassment

The duty to “take reasonable steps” to prevent sexual harassment (the proactive duty) came into force in October 2024 and has required a step change for employers.

The Bill further strengthens this duty by requiring employers to take ”all reasonable steps” to prevent sexual harassment (rather than just “reasonable steps”). What will constitute "reasonable" steps is likely to include risk assessments, action plans, and complaint handling procedures. Additionally, reports of sexual harassment will be protected disclosures under the whistleblowing regime. 

It is also proposed that there should be a significant new liability on employers for harassment on any ground (not just sexual harassment) of their employees during the course of their employment by third parties such as customers, suppliers or clients. It will be a defence to show that the employer has taken ”all reasonable steps” to prevent the third party from doing so.  

What should employers do?

• To comply with the proactive duty, you should:
  • Undertake a risk assessment
  • Put together an action plan to manage that risk
  • Provide updated and relevant workplace behaviour training for all staff

We have a set of comprehensive templates and guidance notes to assist employers with their risk assessments and action plan: Why employers need to tackle harassment in the workplace. We also provide training to suit different levels of staff, including an e-training package for staff. 

• To prepare for the significant upcoming changes to harassment laws which are expected to come into force in 2026:
  • Look out for any consultations
  • When further details become available:
    • Review and update your policies to include bullying and harassment by third parties
    • Ensure you have a robust procedure for reporting and responding to complaints
    • Undertake a risk assessment
    • Put together an action plan to manage that risk
    • Provide updated and relevant workplace behaviour and DEI training for all staff

Strengthening flexible working

The government aims to make flexible working the “default where practicable” by putting a greater onus on employers to say yes to requests unless flexible working is not “reasonably practicable.”  Employers will only be able to refuse requests if it is reasonable to do so based on one or more of the eight specified grounds on which employers may refuse a request. They will have to explain in writing to the employee why they believe their refusal is reasonable based on the ground(s) relied on.

What should employers do?

When further details become available:

• Update internal policies, establishing clear decision-making processes
• Train managers on the new rules
• Update flexible working outcome letters to explain why you consider it is reasonable to refuse the application on the ground(s) relied on.

Right to switch off

A new "right to switch off", to be introduced through a statutory Code of Practice, will provide workers with the right to disconnect from work outside working hours and not be contacted by their employer. This is likely to take the form of giving workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties.

What should employers do?

• Look out for the consultation on the new Code of Practice which is expected in 2025
• Introduce a right to disconnect policy (when further details become available)

Whistleblowing cases  - Court of Appeal decisions to look out for in 2025

• SPI Spirits (UK) Ltd v Zabelin: whether contractual provisions in a settlement agreement can cap compensation in whistleblowing detriment claims
• Sullivan v Isle of Wight Council: whether an external job applicant can bring a whistleblowing detriment claim

  3. Diversity, Equality & Inclusion (DEI) and Family friendly rights

The government plans to implement ambitious equality legislation on pay gap reporting, which will apply to larger employers (with 250 or more employees), and on equal pay.

We are likely to see a shift towards greater pay transparency over the coming years with the EU Pay Transparency Directive being implemented across the EU by 7 June 2026 – and it will directly apply to UK employers employing people in the EU. It introduces new obligations on employers to disclose salaries at the point of recruitment, comply with employee requests for pay data, publish gender pay gap statistics and face compulsory audits and penalties where unjustified discrepancies come to light. The Directive will undoubtedly raise expectations of pay transparency and is expected to be a catalyst for increasing obligations on UK employers.

Additional planned reforms include establishing day one rights to paternity, parental and bereavement leave for millions of workers.

• Pay gap reporting and equal pay
• DEI cases to look out for in 2025
• Family friendly rights

Pay gap reporting and equal pay

Gender pay gaps: The Bill includes plans for:

• Gender pay action plan: Large employers, with over 250 employees, to create action plans on addressing gender pay gaps 
• Identifying contract workers: Employers to identify the providers/ employers of contract workers when publishing their gender pay reports

Race and disability: Proposals, to be contained in the Equality (Race and Disability) Bill, which is expected to be published by July 2025, will:

• Make it mandatory for large employers (with more than 250 staff) to report their ethnicity and disability pay gaps
• Extend equal pay rights to protect workers suffering discrimination on the basis of race or disability
• Ensure outsourcing of services cannot be used to avoid paying equal pay
• Implement a regulatory and enforcement unit for equal pay

What should employers do?

• Look out for consultations on these reforms
• To ensure you are ready for the new equal pay rights and ethnicity and disability pay gap reporting, you should take steps now to collect robust employee diversity data - and be clear and transparent about why you are collecting it
• You should also consider carrying out a pay audit, which should be done under legal professional privilege, analysing your data on employee salaries, bonuses and performance, to identify any patterns of bias that may exist in your pay processes, and to devise fair compensation structures

DEI cases to look out for in 2025

• Supreme Court decision - For Women Scotland Ltd v Scottish Ministers: whether the Equality Act definition of “woman” refers to a biological woman only, or if it includes trans women with a Gender Recognition Certificate
• Court of Appeal decision - Higgs v Farmor’s School: whether a Christian employee was discriminated against or harassed because of her protected beliefs which included that gender cannot be fluid and an individual cannot change their biological sex or gender

EAT decisions in:

• Dobson v Cumbria Partnership NHS Foundation Trust: whether the dismissal of a female community nurse for refusing to work occasional weekends for childcare reasons under a new policy was justified and was not indirect sex discrimination
• Randall v Trent College Ltd: whether a school chaplain suffered belief discrimination following a controversial sermon on LGBT issues

Family friendly rights

The Bill introduces day one rights for workers to:

• Paternity leave
• Unpaid parental leave (which gives parents up to 18 weeks’ unpaid leave, at the rate of up to four weeks’ a year for each child over their childhood)
• Unpaid bereavement leave

In addition, it is proposed that unpaid bereavement leave, which currently is a right available only to bereaved parents, will be extended so that all bereaved workers are entitled to unpaid leave at the rate of “at least one week” for each bereavement.

The Bill also includes measures to protect from dismissal women who are pregnant, on maternity or other family leave and during six months after their return to work (with some specific exceptions).

What should employers do?

When further details become available:

• Update your policies on: paternity leave, parental leave and bereavement leave
• Ensure managers are aware of the new rules and are equipped to manage workloads around people taking time off for family or bereavement leave

   4. Wellbeing & mental health

Employee wellbeing will be a key focus for many employers in 2025. In addition to preparing for the SSP and menopause action plan changes ahead, key initiatives employers may consider include access to mental health resources, fostering a culture that values work-life balance, providing targeted support for employees going through the menopause and greater equality for neurodivergent individuals.

• Mental health and long-term absence
• Statutory sick pay (SSP) - enhanced rights
• Menopause action plan
• Neurodiversity

Mental health and long-term absence

The government published its Get Britain Working White Paper as part of its strategy to improve economic activity. The proposals include an independent review into how employers can be better supported to recruit and retain people with disabilities and health conditions, to implement early intervention for sickness absence and to improve the rate of employees returning from sick leave. It will however be some time before any changes are made to help reduce absenteeism and increase employee retention.

A report by the Resolution Foundation in 2024 revealed that young people are significantly more likely not to be working due to mental health problems than those in other age groups. Mental health looks to still be an increasing issue for employers to manage.

What should employers do?

• Identify the precise risks in your business, consider how to mitigate those risks, and implement health and wellbeing strategies to assist
• Consider what support and training your managers need to manage and support employees with mental health illnesses

You can view our recent webinar with Simon Brittz, Counselling Psychologist from HCA Healthcare, here: How employers can manage the increasing mental health issues amongst younger workers.

Statutory sick pay (SSP) - enhanced rights

The Bill includes plans for all workers to be entitled to SSP from their first day of absence rather than their fourth as is currently the case. The lower earnings limit will be removed, but SSP will be payable at a lower rate for these workers.

What should employers do?

• Look out for the consultation on determining the appropriate percentage replacement rate for individuals earning below the current flat rate of SSP
• Review and update your sickness absence policies

Menopause action plan

Increased awareness about the menopause has led to a significant rise in the number of tribunal cases which cite the menopause. As well as presenting litigation risk, menopause has also become a reputational issue for employers.

Following steps taken by the previous government to improve menopause support in the workplace, the Bill introduces a requirement for employers with at least 250 employees to produce and publish a menopause action plan. It is currently anticipated that this requirement will come into force in 2026 at the earliest.

What should employers do?

• Look out for the consultation
• Take steps to produce a menopause action plan (when the requirements are known)

Neurodiversity

Neurodivergent individuals need a supportive workplace in order to thrive at work. Without this, they may have high levels of burnout, stress and anxiety - and this can result in poor wellbeing.

What should employers do?

• Raise awareness of neurodiversity and focus on creating an open and supportive culture where people feel comfortable talking about neurodiversity
• Incorporate neurodiversity into your HR policies and DEI training
• Train line managers so that they feel confident and able to support neurodiverse employees at work and help them make the most of their skills

    5. Artificial intelligence (AI)

The use of AI at all stages of the employment lifecycle, and in particular in the recruitment process, has increased significantly over the last few years. In addition, the development of generative AI applications (such as ChatGPT) which can be used to perform a variety of work-related tasks means that AI is more accessible to the workforce than in the past.

However, AI tools can have inherent biases and lead to discriminatory outcomes, thereby exposing employers to the risk of claims. Using AI tools can also give rise to data protection compliance, privacy and security risks.

The direction of travel in the UK now seems to be towards some form of statutory regulation for AI. In the meantime however, it is important to manage and mitigate the risks of using AI.

What should employers do?

• See the issues identified by the ICO in its Guidance on AI and data protection, AI in Recruitment Outcomes Report and Key questions when procuring and AI tool for recruitment  
• Take steps to understand what decisions are being made by AI systems in the HR process, how those decisions are taken and whether that decision-making is discriminatory
• Use human intervention in HR processes, with a manager reviewing the AI-generated conclusion and taking responsibility for the final decision reached
• Carry out a risk assessment which should be done under legal professional privilege. 

Click here to see how Clyde & Co’s AI team can assist you.

For information about the issues discussed here and how we can help you prepare for these changes, please get in touch.