As we approach April 2025, businesses across the UK will face crucial updates to employment law that could significantly impact payroll, employee rights, and workplace policies. It’s essential for businesses to stay informed and prepared for these changes to ensure a smooth transition and continued compliance. In this guide, we’ll break down the key employment law updates for 2025 and provide practical insights on what they mean for your business.
Keeping up with employment law changes is essential for employers and HR professionals to ensure compliance and maintain best practices. As of 6 April 2025 and beyond, several significant legislative updates will come into effect, impacting businesses across the UK. These changes will affect everything from payroll and employee rights to workplace policies. In this guide, we’ll break down the key updates and provide practical tips on how employers can prepare for a smooth transition.
1. Increase in Employer National Insurance Contributions (NICs)
Starting on 6 April 2025, employer NICs will increase by 1.2 percentage points, from 13.8% to 15%. Additionally, the Secondary Threshold—the point at which employers start paying NICs for an employee—will decrease from £9,100 to £5,000 per annum.
This change will increase payroll costs, meaning businesses need to reassess their budgets and workforce planning strategies. However, the Employment Allowance will rise from £5,000 to £10,500, helping smaller businesses offset the additional NIC costs. Employers should prepare by reviewing payroll systems and considering the financial impact of these changes.
2. Neonatal Care Leave and Pay
From April 2025, eligible employees will have the right to Neonatal Care Leave and Pay—up to 12 weeks of paid leave if their baby requires neonatal care. This leave is in addition to existing maternity, paternity, and parental leave entitlements.
Employers should update their parental leave policies to accommodate this new entitlement, ensuring that the process for requesting and administering neonatal care leave is clearly communicated to employees.
3. Strengthened Protections Against Unfair Dismissal
The Employment Rights Bill proposes removing the current two-year qualifying period for unfair dismissal claims, replacing it with a statutory probationary period of nine months. This means that employees will be protected from unfair dismissal after just nine months of employment, while employers will still be able to dismiss employees during the probationary period through a simplified process.
Businesses will need to revise their performance management and probation review processes to ensure that they are fair, transparent, and compliant with these new protections.
4. Changes to Zero-Hours Contracts and Predictable Work Patterns
Employees on zero-hours contracts or other flexible work arrangements will now have the right to request a contract with guaranteed hours that reflect their actual working patterns over a 12-week reference period.
Employers using zero-hours contracts should prepare for an increase in requests for stable hours and adjust their contracts to comply with these new requirements, which aim to provide greater job security and transparency for workers.
5. Collective Redundancy Consultation Adjustments
Currently, collective consultation obligations are triggered when an employer proposes 20 or more redundancies at a single establishment within 90 days. From mid-2025, the scope of this rule will be extended to include all redundancies across multiple sites, increasing the likelihood that businesses will need to conduct collective consultations.
Employers planning restructures should be aware of this shift and factor in the additional compliance obligations to avoid potential penalties.
6. Ethnicity and Disability Pay Gap Reporting
A proposed amendment to the Equality Act will introduce mandatory ethnicity and disability pay gap reporting for businesses with 250 or more employees. This follows the existing gender pay gap reporting requirements and aims to improve workplace equality.
Employers should start collecting the necessary data and develop strategies to address any disparities before the legislation comes into force.
7. Expansion of Protection Against Third-Party Harassment
The Worker Protection Act 2024 will expand protections against third-party harassment, requiring employers to prevent harassment by customers, suppliers, contractors, and others. Employers must implement stronger anti-harassment policies and provide training to their workforce to meet the new legal requirements.
8. Employment Tribunal Compensation Limits
From 6 April 2025, the limits for employment tribunal awards will increase. The maximum compensatory award for unfair dismissal will rise from £115,115, and the cap on a week’s pay for statutory redundancy pay and basic awards will also increase from £700.
Employers should stay informed about these changes and factor them into their workforce planning and dispute resolution strategies.
Top Tips for Employers to Prepare for 2025 Employment Law Changes
- Review Payroll Budgets: Adjust for the increase in employer NICs and take advantage of the expanded Employment Allowance for smaller businesses.
- Update Parental Leave Policies: Ensure compliance with the new Neonatal Care Leave and Pay entitlements and communicate these changes to employees.
- Reassess Probation and Dismissal Procedures: Revise performance reviews and dismissal processes to align with the new unfair dismissal protections.
- Prepare for Flexible Working Requests: Anticipate an increase in requests for stable hours and ensure your processes for handling these requests are fair and compliant.
- Adjust Redundancy Plans: Factor in the broader scope of collective consultation obligations when planning restructuring or redundancies.
- Start Pay Gap Reporting Preparations: If applicable, begin gathering data for ethnicity and disability pay gap reporting to ensure compliance.
- Enhance Anti-Harassment Training: Strengthen your workplace policies and training programmes to mitigate third-party harassment risks.
- Monitor Tribunal Compensation Updates: Stay updated on changes to tribunal compensation limits and ensure your dispute resolution processes are in line with the new rules.
Quotes and Sources
Government Legislation Updates: “The introduction of Neonatal Care Leave ensures that working parents are supported during critical family moments.” (GOV.UK)
HR Expert Commentary: “The removal of the two-year qualifying period for unfair dismissal will be a game-changer for both employers and employees. Businesses need to reassess how they manage probation periods.” – HR Legal Specialist
Industry Analysis: “The shift in redundancy consultation rules underscores the need for businesses to think holistically about workforce changes across multiple sites.” – Employment Law Consultant