The KLG Employment Law Update: Reforms & Tribunal Decisions – August 2025 Newsletter

In this month’s edition, we bring you the most important developments in UK employment law, including the latest progress on the Employment Rights Bill, whistleblowing framework review, upcoming restrictions on NDAs, a new corporate offence for failing to prevent fraud, and a key tribunal ruling on employment status. With several changes set to take effect in the coming months, now is the time for employers to review contracts, update policies, and prepare for reform.

Employment Rights Bill – Progress Update August 2025

On 23 July 2025, the House of Lords concluded the report stage of the Employment Rights Bill (ERB) following its fourth seating, the Bill will now proceed to its third reading on 3 September.

The key recent updates include:

· Last month, we reported that the latest version of the Employment Rights Bill includes a new provision that would prevent employers from using Non-Disclosure Agreements (NDAs) to stop workers from making allegations or disclosures related to harassment or discrimination. This covers most types of harassment or discrimination based on a protected characteristic under the Equality Act 2010, although it does not currently extend to claims of victimisation or failure to make reasonable adjustments. More recently, a Government Impact Assessment on the proposed change has been published. It indicates that NDAs may still be used if the NDA is requested by the worker.

· Planned consultations on non-compete clauses, employment status, and AI in the workplace. During a House of Lords debate on the Employment Rights Bill on 21 July 2025, government minister Baroness Jones confirmed that the government will be consulting on options for reforming non-compete clauses in employment contracts “in due course”, in response to concerns raised about the use of AI in employment.

Some “ping-pong” between the Commons and Lords is expected after the summer recess, but royal assent is anticipated in autumn 2025, with most reforms effective from April 2026.

Whistleblowing Framework Review

The Government has recently published an independent report titled “Understanding the Effectiveness of the Whistleblowing Framework in the UK”. The report evaluates the current whistleblowing regime against the original aims of the Public Interest Disclosure Act 1998, which introduced statutory protections for workers raising concerns in the workplace.

Key findings indicate that a significant number of workers remain unaware of their rights or are unclear about how to raise concerns. The report also highlights considerable variation in how

organisations handle whistleblowing disclosures, with inconsistent levels of support and follow-up for whistleblowers.

Recommendations include:

· Clarifying who qualifies for protection,

· Defining what constitutes a “protected disclosure” more clearly,

· Strengthening protections for whistleblowers,

· Improving reporting procedures, and

· Raising awareness about legal rights and protections.

Although the current Government has not yet announced its response or plans for reform, the report highlights the need for greater consistency, transparency, and accessibility within the UK’s whistleblowing framework.

Government Consultation on Unpaid Internships

The Government is inviting evidence and opinions on unpaid internships and internships paid below the National Minimum Wage (NMW), as well as other roles that may be unpaid or underpaid.

Under its Plan for Change, the Government has pledged to ban unpaid internships, except where they form part of a recognised educational or training course. Input is being sought from a wide range of stakeholders, including:

· Individuals with internship experience

· Employers and businesses

· Trade Unions

· Educational Institutions

· Legal and HR professionals

· Charities and non-profits

In light of this consultation, organisations should review any current or planned internship arrangements to ensure they are compliant with National Minimum Wage regulations. Employers should ensure appropriate internship agreements are in place to avoid potential legal risk. At Kalra Legal Group, we can assist by drafting tailored internship agreements to help ensure your organisation remains compliant.

Failure to Prevent Fraud Offence: In Force from 1 September 2025

A significant corporate criminal offence comes into effect, targeting large employers whose employees or associates commit fraud. To avoid liability, organisations must demonstrate that they have reasonable fraud prevention procedures in place. Large employers are defined as those meeting at least two of the following: turnover over £36 million, assets over £18 million, or more than 250 employees.

Employers should proactively:

· Conduct fraud-risk assessments

· Implement and document preventive measures

· Train staff and promote integrity based culture

· Highlight whistleblowing protocols

Please get in touch if you would like advice on how these changes may affect your organisation or support in updating your internal policies.

Case Law Update: Tribunal Rules Drivers are ‘Workers’ – Not self-Employed

In a recent decision involving BCA Logistics Ltd, the Employment Appeal Tribunal confirmed that the company’s drivers should be classed as workers rather than self-employed contractors.

Although the contracts included a substitution clause allowing drivers to send someone else in their place, the tribunal found this was never exercised and was not a genuine right. As a result, the drivers were entitled to:

· National Minimum Wage

· Paid annual leave

· Parental leave

· Rest breaks and working limits

Why this matters:

If your business engages individuals as freelancers, contractors, or self-employed on an ongoing or regular basis, it is essential to ensure their actual working arrangements match their contractual status. Misclassification can result in significant liabilities, including back pay, holiday pay, and potential tax consequences.

Final Thoughts

With several major reforms and compliance obligations on the horizon, now is a crucial time for employers to proactively assess their internal policies, contractual terms, and working arrangements. Whether it’s preparing for changes under the Employment Rights Bill, navigating new restrictions on NDAs, reviewing internship practices, or ensuring proper employment status classifications, staying ahead of the curve will help minimise legal risk and build a stronger, more transparent workplace culture. At Kalra Legal Group, our Employment Law team is on hand to support you with tailoured advice to help your organisation adapt with confidence.