Overview Since winning the general election in July 2024, the Labour government has begun making big changes to UK employment laws. Labour’s aim is to apparently improve workers’ rights and make workplaces fairer and safer, but the proposed reforms will certainly throw up some major challenges for employers, especially small businesses.

In summary, Labour wants to:

  • Improve job security.
  • Raise wages.
  • End unfair practices like “fire and rehire.”
  • Give workers more rights from day one of employment.
  • Make sure everyone is treated fairly, no matter their race, gender, disability, or background.

The Changes in More Detail

New Employment Rights Bill

    • Introduced within the first 100 days of being in office.
    • Removes the 2-year minimum before workers can claim unfair dismissal.
    • Bans “fire and rehire” in most situations.
    • Increases protection against unfair treatment.
    • Some changes are expected to become law by July 2025.
    • Most changes won’t take effect until 2026, with unfair dismissal reforms starting no sooner than Autumn 2026.

    What is Fire and Rehire?

    • This is when an employer ends (or threatens to end) someone’s job and offers to rehire them on worse terms—like less pay, fewer benefits, or reduced hours.
    • Labour’s employment law reforms 2024 UK will make this practice unlawful in most cases.
    • Businesses must now follow a proper process based on consultation and agreement. Get in touch with us if you’re thinking about doing this or would like to know more.
    • Only in limited, exceptional situations—such as when a company is at serious financial risk—might changes be allowed.

    What is Unfair Dismissal and What’s Changing?

    • Currently, employees must work for 2 years before they can claim unfair dismissal. Labour’s reforms removes that 2-year requirement, giving all workers protection from day one. Unfair dismissal means being sacked without a valid reason or without the employer following a fair process (e.g. no warnings, no investigation). After the reforms start (expected in Autumn 2026), employers must:
      • Ensure dismissals are based on fair reasons (like misconduct or redundancy).

      • Follow a proper disciplinary or redundancy procedure.

      • Keep written records of the process.

    • This change will make it harder to dismiss staff without strong justification, especially in probation periods. It increases the risk of claims at tribunal if employers don’t follow fair procedures from the start.
    What is a Proper Redundancy Procedure?

    • A redundancy is when a job is no longer needed (e.g. due to business closure, reduced work, or restructuring).
    • A fair redundancy procedure usually includes:
      • Planning and business case: Clearly explain why redundancies are necessary.
      • Consultation: Speak with affected employees or their representatives. For 20+ redundancies, collective consultation is required.
      • Fair selection: Use fair and objective criteria to choose who may be made redundant (e.g. skills, qualifications, performance).
      • Alternatives: Consider if there are other roles employees could do instead of being let go.
      • Notice and payments: Provide the correct notice and redundancy pay.
      • Appeal process: Allow employees to appeal the decision.
    • Employers must follow this process to avoid legal challenges for unfair dismissal based on redundancy.

    Day-One Rights

    • All workers will get basic rights such as parental leave, sick pay, and unfair dismissal protection from their first day.
    • These Labour employment law reforms are expected to roll out during 2026.

    Better Pay Rules

    • New rules will look at pay gaps based on ethnicity and disability (like the current gender pay gap reports).
    • Plans to stop employers from paying outsourced workers less than in-house staff.
    • Consultations are happening in 2025; implementation expected in 2026–2027.

    Equal Pay and Anti-Discrimination Laws

    • A new Bill will ensure people of all races and with disabilities are paid fairly.Employers with 250+ staff will need to report pay differences.Stronger enforcement and penalties for breaking the rules.
    Proposals on Discrimination

    • The government plans to bring in new legal protections to address unfair treatment based on race, disability, gender, and other protected characteristics.
    • One key proposal is to allow claims for combined (dual) discrimination, where someone is treated unfairly due to a combination of two characteristics (like race and disability together). This would be a new right under section 14 of the Equality Act 2010.
    • Employers may need to:
      • Conduct ethnicity and disability pay gap reporting and publish action plans to reduce disparities.
      • Comply with extended equal pay laws so that equal pay applies not just by gender, but also by race and disability.
      • Include outsourced workers in their pay gap reporting and ensure they are not paid less than directly employed staff.
      • Implement menopause action plans in larger organisations and support neurodiverse workers.
    • A new Equal Pay Enforcement Unit may be set up to investigate, advise, and take action where discrimination or pay inequality is found.
    • The government also intends to increase protections for volunteers and interns against workplace harassment.
    • Employers should start reviewing policies and practices now to ensure they do not indirectly disadvantage any protected groups.

    New Fair Work Agency

    • A single body to enforce workers’ rights, carry out inspections, and fine lawbreakers.
    • Expected to be established as part of the Employment Rights Bill roll-out during 2026.

    Parental and Carer’s Leave

    • Parental leave available from day one.
    • Review of maternity and paternity leave system.
    • Considering paid leave for carers.

    Menopause and Neurodiversity

    • Large employers will need a plan to support women through menopause.
    • More awareness of neurodiversity at work.

    AI and Surveillance at Work

      • Employers must consult with employees or their representatives (such as trade unions) before introducing surveillance technologies like monitoring software, tracking tools, or AI-based performance systems.
      • This consultation should happen in advance and include meaningful discussion with a view to reaching an agreement.
      • Employers must assess and minimise risks of bias, privacy breaches, and unfair decision-making when using AI tools at work.
      • The government is planning further guidance and possibly new laws on what rights workers will have in relation to surveillance and how employers must implement these technologies fairly.
      • At a minimum, employers must:
        • Be transparent about what technologies are used and why.
        • Ensure monitoring is proportionate and respects employee privacy.
        • Avoid discriminatory or overly intrusive systems.
        • Document the consultation and reasoning behind any tech roll-out.
      • More detailed rules may be developed following government consultation announced for 2025. If you’re interested in getting an AI policy in place, including surveillance and how your team can use it for work, please get in touch with us

      Support for Self-Employed Workers

        • Labour recognises that self-employed workers often lack basic protections and face issues such as late payments, unclear contracts, and poor working conditions.
        • The government plans to introduce:
          • A right to a written contract: Self-employed individuals (like freelancers and contractors) will be entitled to a clear written agreement outlining the terms of their engagement.
          • Protection from late payments: New measures will aim to prevent clients from delaying or withholding payments unfairly, which is a common problem for the self-employed.
          • Extended health and safety protections: Self-employed workers will have more explicit protections under workplace health and safety laws, especially in high-risk environments.
          • Protection from blacklisting: Those who raise health and safety concerns will be protected from being blacklisted or penalised.
          • A right to withdraw labour in situations where there is a serious and immediate danger to health or safety.
          • Representation: The reforms may also include improved access to representation, enabling the self-employed to raise concerns or disputes more easily.
        • These proposed rights aim to ensure self-employed workers are not left out of key protections that regular employees and workers receive. If you would like to get a Consultancy Agreement in place for these, check out our pricing list and information for this, or simply get in touch with us.

        Race and Disability Equality Bill (Coming Soon)

          • Will make it easier for workers to raise concerns about being treated unfairly because of race or disability.
          • May include mandatory pay gap reports and rules to improve workplace diversity.
          • Currently under consultation; draft expected in late 2025, implementation from 2026.

          What Employers Should Do

          When Will These Changes Happen?

          • Mid-2025: Bill receives Royal Assent.
          • Late 2025: Some immediate changes begin (e.g., union rules).
          • Throughout 2025: Public consultations and new regulations announced.
          • 2026 and beyond: Most reforms (e.g., day-one rights, unfair dismissal, fire-and-rehire rules, equality reporting) begin to take effect.
          • Autumn 2026: Expected start date for unfair dismissal changes.

          In conclusion Labour’s employment law reforms are wide-reaching and aim to bring lasting change to UK workplaces. Businesses need to keep an eye on these developments to stay compliant and support their employees effectively.

          Published by Fergus Thompson