2025 is shaping up to be a transformative year for UK employment law, with changes that could significantly impact businesses and their workforce. From wage adjustments to expanded family leave protections, these reforms align with the government’s vision to Make Work Pay. Understanding and preparing for these changes is essential to staying compliant and supporting your employees effectively.
Key Changes Effective From April 2025
- Minimum/Living Wage Increases: Employers should budget for higher payroll costs as rates for workers of all ages are set to rise.
- Rise in Employer National Insurance: Businesses will need to plan for increased contributions, impacting overall staffing costs.
- Rise in Employment Allowance: This change will provide some relief for smaller businesses by offsetting national insurance costs.
- Minimum/Living Wage to Merge: A unified wage rate will simplify compliance but may also result in adjustments to pay structures.
Anticipated Updates for 2025 (Dates Unconfirmed)
- Neonatal Care (Pay and Leave Act): Employees with premature or sick babies will gain additional rights to paid leave, requiring updates to leave policies.
- Zero-Hour Contract Changes: New regulations are expected to provide greater security and predictability for workers on flexible contracts.
- Expansion of Statutory Sick Pay: From day one of employment, all workers will be eligible, increasing costs for businesses.
- Ban on Fire and Rehire Practices: Employers will need to consider alternative approaches to restructuring or renegotiating contracts.
- Statutory Probation for Unfair Dismissal: The introduction of a probation period will provide immediate protection against unfair dismissal for new employees.
- Menopause Action Plans: Organisations will be encouraged to implement strategies to support employees experiencing menopause.
- Increased Family Leave Protections: Enhanced rights for parents and carers will require policy updates and could increase employee absences.
- Gender Pay Gap Action Plans: Employers may need to draft and implement detailed plans to address gender pay disparities.
Expected Changes for Late 2025 or Early 2026
- Day-One Employment Rights: The removal of the two-year qualifying period for unfair dismissal will grant immediate protection to all new employees.
- Ethnicity and Disability Pay Gap Reporting: Businesses will be required to track and report pay disparities based on ethnicity and disability.
- Equal Pay for Minority and Disabled Workers: Further measures are anticipated to ensure fair pay practices for all employees.
Estimated dates, subject to confirmation.
Preparing for the Changes
To prepare for these reforms, it’s essential to take proactive steps:
- Review and update contracts, policies, and procedures to meet new requirements.
- Plan for increased payroll costs and administrative changes.
- Train your HR teams and management to implement updates smoothly.
We’ll share a detailed Employment Law update in April 2025. If you’re concerned about these changes, please be assured that we’re here to assist with tailored advice to minimise their impact on your business.
Sources: CIPD Employment Law Updates