Employment Law – what’s coming up in 2025?

Employment law update
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The publication of the Employment Rights Bill last October highlighted significant changes coming to UK employment law. Whilst many of these reforms are not anticipated to take effect until 2026, this article highlights key changes to be aware of during 2025.

Protective awards and compensation uplifts – failure to properly consult

From 20 January 2025, Employment Tribunals will be able to increase the protective awards (compensation payments) by up to 25% when an employer has failed to comply with the statutory Code of Practice on dismissal and re-engagement. When an employer is carrying out a collective redundancy programme involving 20 or more employees, it has a duty to consult in a meaningful way. If an employer fails to properly consult, this new legislation could have a significant increase in costs, adding a potential 25% uplift to the existing 90 days’ gross pay per affected employee.

When planning redundancies or changes to terms and conditions, employers should review their consultation procedures to ensure that they meet the requirements, and seek further advice if concerned. We will be discussing this in further detail at our next HR Club on 13 February. If you would like to find out more, please book your place here.

Changes to pay from April 2025

There are several changes to different elements of pay due to be introduced from April 2025:

National Minimum Wage and National Living Wage increases from 1 April

  • Ages 21 and over: £12.21 per hour (6.7% increase)
  • Ages 18-20: £10.00 per hour (16.3% increase)
  • Ages 16-17 and apprentices: £7.55 per hour (18% increase)

National Insurance Contributions (NICs) – from 6 April

  • A rise in the secondary Class 1 NIC rate from 13.8% to 15%.
  • A reduction in the secondary NIC threshold from £9,000 to £5,000, making more earnings subject to NIC.
  • There will also be an increase in the Employment Allowance from £5,000 to £10,500, which will provide some relief for smaller employers.

Statutory payments

  • Statutory sick pay (SSP) will rise from £116.75 to £118.75 per week.
  • Statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay will rise from £184.03 to £187.18 per week.

Employers need to be aware of these changes, to allow sufficient time to amend payroll systems and when planning salaries during recruitment. Changes to NICs will lead to increased payroll costs, especially for employers where more employees will now earn above the reduced threshold.

These changes may also mean you need to review pay structures, as there could be less of a gap between entry level roles and management level roles.

Broadening of family-friendly legislation

HMRC guidance suggests that it is likely that the Neonatal Care (Leave and Pay) Act 2023will come into effect from April 2025. This will grant parents up to 12 weeks’ leave and statutory pay when their baby requires neonatal care. This will be a day-one right and will be in addition to existing parental leave rights.

The Paternity Leave (Bereavement) Act 2024 is also expected to be introduced in April 2025, which will provide bereaved partners a legal right from day one to leave if the mother or adoptive parent passes away. This will remove the 26-week minimum service requirement.

Although we are awaiting finer details and guidance on the above, employers can be aware of the likely changes when updating family leave policies. They could also consider any further support and guidance for managers around holding sensitive conversations when dealing with any employees impacted.

Other changes on the horizon

2025 could see the publication of the Government’s Draft Equality (Race and Disability) Bill for consultation, which could extend equal pay rights to protect workers suffering discrimination on the basis of race or disability. The government’s plan toMake Work Pay included a right for workers to disconnect from work outside of working hours. The Government plans to introduce the policy through a statutory code of practice, with a consultation expected to begin in 2025.

There will also be further consultations on several measures in preparation for changes that are likely to be implemented in 2026 under the Employment Rights Bill. To prepare for these changes, employers can consider any further training requirements for their managers. For example, a ‘day one’ right to not be unfairly dismissed could lead to additional training needs in areas such as performance management or a review of probation procedures.

If you would like to discuss how you can ensure your organisation is compliant and taking steps to prepare for the upcoming legislation, please contact Rachel Walker in our team on 07392 090890.