Here are 7 keys issues lying ahead for employment law and hospitality in 2025 including unfair dismissal

Employment law specialists Jillian McLaughlan and Debbie Fellows explain why 2025 is set to be a big year for the UK, with reforms that will transform employees’ rights – particularly those in the hospitality sector.

The end of 2024 saw the passing of the new Employment Rights Bill, which set out several changes that are likely to come into force during 2025. While the expected changes will have an impact on employers across all sectors, the hospitality industry will be especially affected.

The first change will likely be the new rates of the National Living Wage and National Minimum Wage, which will apply from 1st April:

• National Living Wage for over 21s increases to £12.21
• National Minimum Wage for 18-20-year-olds increases to £10
• National Minimum Wage for 16-17-year-olds and Apprentice rate increases to £7.55
• Statutory Sick Pay increases to £118.75 per week
• Statutory Maternity Pay and other family-related leave pay increases to £187.18 per week
• Lower Earnings Limit increases to £125 per week.

The aim of these changes is to establish rates that reflect the cost of living and potential inflation in the coming year. However, there is a risk that significant increases will mean employers are less willing to appoint apprentices and those in the 16-20 age bracket.

Employers – especially those in the hospitality sector, which has a large number of younger workers – must plan for the adjusted rates and pay rises that flow from this. Businesses should be mindful that those who are employed on rates only slightly more than the new rates may expect pay rises, and this should be a consideration when budgeting for the new financial year. Unfortunately, it is likely that some employers will also question whether they can afford to continue employing apprentices amid the wage increases.

Further, workers will have the right to Statutory Sick Pay on day one with the four-day waiting period being removed. Statutory Sick Pay is also strengthened by the removal of the Lower Earnings Limit for all workers. This is likely to have a significant financial impact on employers as one of the consequences of being sick – no pay for three days – has been removed, meaning employers will have to plan and budget for this expense.

For many years, employers have been able to dismiss employees with less than two years’ service without the risk or consideration of an unfair dismissal claim. As part of the proposed changes, which may be introduced this year, the Government intends to give employees the right to claim unfair dismissal from day one of employment, subject to probationary periods. Given the large number of staff that employers in the hospitality sector often recruit, sometimes seasonally, there may no longer be the option to simply dismiss after a ‘busy period’ or where it is ‘not working out’.

This may also have an impact in terms of redundancy. Employers must plan for the future much further in advance and create a robust but fair recruitment process to avoid the need to dismiss employees. Those in the hospitality sector may need to make good use of the probationary period exemption but we are yet to see the detail and understand the extent of this.

Another huge change set for 2025 (albeit one anticipated by employers in the hospitality sector) concerns zero-hour working. The Government has confirmed that a total ban on these contracts won’t be implemented as employees and workers do sometimes see a benefit, but there is likely to be a significant shift in such contracts and the length of time for which employers can use them. The proposed changes will mean that an employee can ask for a contract reflective of the hours that they have worked over a certain period (likely the previous 12 weeks).

The proposals also impose a requirement to provide casual employees or workers with reasonable notice of shifts they are required to work, and where someone remains on a zero-hour contract, if a shift is cancelled, shortened or moved at short notice, they will be paid for this. This will have a significant impact on the way that employers in the hospitality sector plan shifts, recruit and engage individuals. Employers who do use zero-hour contracts should plan how they will offer ‘guaranteed hours’ to individuals and what they can do within the business if the need for those guaranteed hours reduces.

A further change in the new employment legislation provides that the employer must give the worker a written statement of that individual’s right to join a trade union, at the same time as supplying their statement of employment particulars – ie day one of employment. Listed trade unions also have the right to access the employer’s workplace on one or more occasions, for the purposes of meeting, representing, recruiting or organising workers, and to facilitate collective bargaining; the protections for representatives will also be increased. The purpose of this is to strengthen the role of the unions within the workplace and make them more accessible.

Hospitality employers with a large number of staff should consider how trade unions in the workplace will be managed if this is not already in place. Employers should also think about how trade unions will impact the way that they consult with staff, and they may wish to consider what mechanisms can be implemented to involve staff in consultation on matters currently impacting them – before the changes are implemented.

Flexible working will now become the default position, and employers will be expected to consider any flexible working application from day one of employment. Employers can, however, refuse a flexible working application based on any of the grounds listed in the Bill and by showing that it is reasonable to refuse on that/those ground(s). This measure has been introduced to increase compatibility between the workplace and employees’ lives and will only be the default position where practical.

Some hospitality employers will already offer a large degree of flexibility for certain roles, but the new legislation will apply these rights to all roles. It is vital that employers seriously consider what type of flexibility – including working patterns and hybrid working – can be offered to all roles. Where flexible working is not possible, employers must have a good reason for their decision.  

Currently, the employer’s legal obligations for collective redundancy are triggered where there is a proposal of 20 or more redundancies, within a period of 90 days or less, at one establishment. The new legislation removes reference to a single establishment. The effect of this is that the employer’s obligations may be triggered where there are 20 or more proposed redundancies across different locations of the business. Multi-site operators in the hospitality industry will be impacted greatly by this, particularly given the hefty penalties that can arise from failure to comply with this duty.

This measure will also increase the time and the length of consultation required. Employers will be required to propose business plans much further in advance to take this into account and review the business as a whole, rather than focusing on individual establishments.

2025 may also see a requirement for larger employers, with 250 staff or more, to publish action plans to close their gender pay gaps. Under current legislation employers simply publish their pay gap figures. Large employers in the hospitality industry should prepare by developing action plans in advance.

With a host of changes likely to be implemented this year – and possibly others to come – hospitality employers should begin considering now what these new proposals will require of them, to reduce the burden when the legislation is passed.

Written by Jillian McLaughlan, senior solicitor, and Debbie Fellows, partner, Thorntons