17 Dec 2025
At a glance: Employment law reform in 2025
Outside of the Employment Rights Bill, there were plenty of other headlines in employment law in 2025. In our summary table we provide a concise digest of the developments that brought significant change.
| Area of reform | Summary | Relevant date |
| Post termination restrictions: Non-compete clauses – open Govt. consultation paper. | The Govt. working paper on options for reform of non-compete clauses in employment contracts makes various proposals, including: limited statutory duration; full ban; ban below salary threshold; hybrid options. | Response deadline: 18 Feb 2026. |
| Non-financial misconduct in financial services. | The FCA published its final policy statement on NFM: PS25/23: Tackling non‑financial misconduct in financial services. Its previous consultation on guidance in the Code of Conduct (COCON) and the Fit and Proper Test for Employees and Senior Personnel (FIT) sourcebooks, ran from July- mid September 2025. The December policy statement includes minor amendments to reflect the consultation feedback. Including new examples and flow diagrams to assist organisations to apply COCON rules consistently. In summary, the final paper confirms the FCA is: amending COCON to explain how NFM can be a breach of the conduct rules and aims to make it easier for SM&CR firms to interpret and consistently apply its rules; explaining how NFM forms part of FIT sourcebook. | Policy statement published 12 December. New guidance coming into force 1 September 2026. |
| Form HR1 (Collective Redundancies) – Digital Only. | All organisations are required to use the online HR1 – Advanced Notification of Redundancies digital form when notifying the Govt. that it is consulting to make 20 or more people redundant in one establishment. The previous Word document format became obsolete. | Effective 1 December. |
| Extension of Acas Early Conciliation Period. | Acas Early Conciliation period extended from 6 to 12 weeks. How the process works – Early conciliation – Acas | Effective 1 December. |
| Remuneration – PRA and FCA announce changes to banker bonuses for 2025 | Bank of England. | Restrictions lifted include: Bonus deferral period for senior bankers reduced from eight to four years; and The regulators will also allow part-payment of bonuses for the most senior bankers from year one, rather than year three as it was previously. | Effective 16 October. |
| The Senior Managers Certification Regime – consultation exercise. | FCA consultation opened in July 2025. Proposals included: removal of the Certification Regime from FSMA 2000. CP25/21: Senior Managers and Certification Regime review | FCA | Closed 7 October. Awaiting response. |
| NDAs: Victims and Prisoners Act 2024 (Section 17). | NDAs and confidentiality clauses cannot lawfully prevent a “victim of crime” from making certain disclosures. | Effective 1 October. |
| Review of Parental Leave & Pay. | Comprehensive review of maternity, paternity and shared parental leave and pay. | Launched 1 July; call for evidence closed 25 Aug. |
| Pay transparency and reporting – UK consultation exercise | The Govt. launched an Equality (Race and Disability) Bill: mandatory ethnicity and disability pay gap reporting consultation exercise March to June 2025. We await the findings. | Consultation closed June 2025. EU pay transparency provisions coming into force June 2026. |
| Data protection. | The Data (Use and Access) Act 2025 received Royal Assent on 19 June 2025. Reforms are being brought in piecemeal by secondary legislation. We will continue to update you as relevant changes come into force. | 19 June 2025 onwards. |
| Supreme Court judgment: For Women Scotland; and the subsequent EHRC guidance | The Supreme Court held that references to “men”, “women”, and “sex” in the Equality Act relate to biological sex. For Women Scotland Ltd (Appellant) v The Scottish Ministers (Respondent) – UK Supreme Court. The Equality and Human Rights Commission (EHRC) ran a consultation and following its closure submitted a draft code of practice for services, public functions, and associations for parliamentary approval on 4 September. EHRC: UK Supreme Court ruling on the meaning of sex in the Equality Act: our work. | Supreme Court Judgment: 16 April 2025. Interim EHRC guidance withdrawn. Parliamentary approval of code of practice: awaited. |
| Neonatal Care Leave (NCL) and Pay | Eligible parents can take NCL once their child has been in neonatal care for at least seven consecutive days. What the law says – Neonatal care leave and pay – Acas. | In force 6 April. |
| Gender critical beliefs: Higgs -v- Farmor’s School | Court of Appeal held that a dismissal for gender critical posts on Facebook was direct discrimination. Higgs -v- Farmor’s School – Courts and Tribunals Judiciary | Court of Appeal judgment: February 2025 |
| Collective redundancy protective awards | In the event of a failure to follow collective consultation requirements, an adjustment to compensation of up to 25% may be made for a failure to follow the Dismissal and Re-engagement Code of Practice. | From 20 January 2025 |
| Duty to Prevent Sexual Harassment | Proactive duty on employers to take reasonable steps to prevent sexual harassment – ongoing duty. Sexual harassment and harassment at work: technical guidance | EHRC. | The course of 2025: Ongoing obligation to review and update |
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