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HR Changes for 2025

Upcoming Employment Law Changes

With April here, significant changes to the UK employment law are set to take effect, which will impact business and workers across the country. From increases in the National Minimum Wage, to reforms in statutory sick pay and employment rights, these changes aim to improve working conditions.

Staying ahead of these changes is crucial for the employer to avoid legal risks, financial penalties and workplace disputes. Failure to comply could lead to costly tribunal claims and reputational damage.

This article breaks down the key updates and how you should apply these changes to the workplace.

National Minimum and Living Wage Increases (from 1st April 2025)

  • The National Living Wage for workers aged 21 and over will increase by 6.7%, from £11.44 to £12.21 per hour. This means annual earnings will increase by over £1,500, reaching £23,805.75 for a 37.5 hour week and £25,396.80 for a 40 hour week.

  • For 18 to 20-year-olds, the minimum wage will rise by 16.3%, from £8.60 to £10.00 per hour.  For a 37.5 hour week, this would increase to £19,500 and for a 40 hour week, £20,800.

Statutory Sick Pay (SSP) Reforms (from 6th April 2025)

  • SSP will increase from £116.75 to £118.75 per week.​ 

  • The lower earnings threshold to qualify for SSP will rise to £125.00 per week, aligning with increases for other statutory family-related payments. ​ 

Employer National Insurance Contributions (from 6th April 2025)

  • Employer contributions on salaries above £5,000 will from 13.8% to 15%, impacting payroll expenses. ​ 

Employment Tribunal Compensation Limits (from 6th April 2025):

  • The limits (maximum or minimum) applying to certain awards of Employment Tribunals and other amounts payable under employment legislation will increase.

Introduction to Neonatal Care Leave and Pay (from 6th April 2025)

  • Exercised as a day one right, employees will be able to take up to 12 weeks of statutory neonatal care leave and pay. Statutory Neonatal Care Pay (SNCP) is paid at the statutory prescribed rate (initially £187.18 from April 2025) or 90% of earnings if lower. 

  • Parents of babies admitted to neonatal care within 28 days of birth and requiring continuous hospital stay of at least 7 days are eligible.

  • This is in addition to any other leave family leave entitlement, such as maternity and paternity leave. The leave must also be taken within the first 68 weeks of the baby’s birth.

Introduction of the Employment Rights Bill:

  • The Employment Rights Bill introduces several reforms:

    • Restrictions on zero-hours contracts, requiring employers to offer guaranteed hours to zero-hours workers and those on low guaranteed hours who regularly work beyond them.  

    • Establishment of day-one rights for paternity, parental, and bereavement leave. ​ 

    • Strengthening of statutory sick pay by removing the lower earnings limit and cutting out the waiting period before sick pay commences.