Employment Law Changes in 2025: What Employers Need to Know

With a series of legislative updates set to take effect, 2025 will be a pivotal year for employment law in the UK. From pay increases to new leave entitlements and workplace rights, these changes will impact businesses of all sizes. Here’s what employers should be preparing for:

National Minimum Wage Increase

Starting in April 2025, the National Minimum Wage will rise to the following:

• National Living Wage (21+): £12.21 (up £0.77)
• Ages 18-20: £10.00 (up £1.40)
• Ages 16-17: £7.55 (up £1.15)

These increases aim to support workers with rising living costs. Employers—especially those in retail, hospitality, and care sectors—should budget accordingly and ensure compliance by reviewing pay rates and contracts.

Changes to Statutory Payments

Several statutory payments will also see an increase from April 2025:

• Statutory Sick Pay: £118.75 per week (up from £116.75)
• Maternity, Paternity, Adoption, Shared Parental, and Bereavement Pay: £187.18 per week (up from £184.03)

Additionally, the lower earnings limit for these payments will increase to £125 per week. Businesses should update payroll systems and inform employees about the new rates.

Employer National Insurance Contributions (NICs)

From April 2025, employers will face higher NIC costs:

• The secondary NIC threshold will drop from £9,100 to £5,000.
• The employer NIC rate will rise from 13.8% to 15%.
• To ease some of the burden, the Employment Allowance will increase to £10,500, benefiting smaller businesses.

Employers should assess the financial impact of these changes and adjust budgets accordingly.

Neonatal Care Leave and Pay

In April 2025, the Neonatal Care (Leave and Pay) Act 2023 will take effect, granting up to 12 weeks of leave to parents of babies admitted to hospital, depending on how long their baby is in neonatal care. This will be on top of other family leave entitlements (maternity, paternity, and shared parental leave).

Eligible parents will also gain entitlement to up to 12 weeks of Statutory Neonatal Care Pay. To qualify for this pay, parents must:

• Have worked for their employer for at least 26 weeks.
• Earn on average at least £125 per week before tax.

This leave applies to babies admitted within the first 28 days of life and who remain in hospital for at least seven days. In addition, this leave must be taken in the first 68 weeks of the baby’s birth. Employers should update parental leave policies and train managers on how to handle requests with sensitivity.

“Right to Switch Off”

A statutory code of practice will be introduced to protect employees from being contacted outside working hours, except in emergencies. Although not yet law, this measure is expected to take effect in 2025.

Employers should proactively:

• Define expectations around after-hours communication.
• Develop policies that support work-life balance.

Employment Rights Bill (ERB) Consultations

Consultations will begin in 2025 on the Employment Rights Bill, which proposes major reforms set to roll out from 2026. Key measures include:

• Day-one rights for unfair dismissal, removing the current two-year qualifying period.
• Enhanced leave entitlements, including immediate access to bereavement, paternity, and unpaid parental leave.
• Flexible working as a default, requiring employers to provide valid reasons for refusal.
• Contract stability for low-hours workers, allowing those with regular hours to request guaranteed hours.

Although these changes won’t take effect immediately, employers should start reviewing workplace policies and training managers to prepare for compliance.

Draft Equality (Race and Disability) Bill

A draft bill is in the works to improve pay equity for ethnic minorities and disabled workers. Proposed changes include:

• Mandatory pay gap reporting for ethnicity and disability (for businesses with 250+ employees).
• Clearer equal pay protections, similar to those already in place for gender, maternity, and pensions.

These reforms aim to simplify the process for employees to challenge pay disparities, and businesses should anticipate new reporting requirements.

Pension Scheme Reforms

The Pensions Scheme Bill, expected in 2025, aims to improve retirement savings and pension scheme efficiency. Key updates include:

• Automatic consolidation of small deferred pension pots.
• A value-for-money framework for defined contribution schemes.
• Tailored retirement income solutions for occupational DC schemes.

Additionally, pensions dashboards will be launched, allowing individuals to view all their pension savings in one place. Employers should ensure their schemes meet the new requirements and communicate changes to employees.

Preparing for 2025

With these significant changes approaching, employers should begin preparations now. Key steps include:

• Reviewing and updating workplace policies.
• Training managers to handle new employee rights and requests.
• Adjusting payroll systems and budgets for increased wages and NICs.
• Staying informed on upcoming consultations and legislative developments.

For tailored advice on how these changes might affect your business, HPC can provide expert guidance to ensure compliance and readiness for the year ahead.

To find out more information or to discuss these upcoming employment law changes in 2025 changes further, please get in contact with our team of experts.

T: 0330 107 1037

E: contact@hpc.uk.com

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