2025 Employment Law Updates
2025 Employment law updates have several confirmed changes taking place in April and anticipated changes in October from the Employment Rights Bill. In this blog, we’re breaking down the key changes every employer needs to know this year, alongside some significant changes from last year that employers should have in place.
Employment Law Updates in April 2025
There are three employment law changes coming into force in April 2025 that will have an impact on all employers. These are the Neonatal Care (Leave and Pay) Act 2023; a national minimum wage increase; a statutory payments increase; and an increase in National Insurance contributions for employers.
Neonatal Care (Leave and Pay) Act 2023
From April 2025, parents will be entitled to up to 12 weeks of paid leave if their newborns are admitted to hospital before they are 28 days old. There must also be a continuous stay of seven days or more.
The minimum entitlement will be one week, in addition to any entitlement to maternity, paternity, or other parental leave.
Your employee needs to have been employed by you for at least 26 weeks before they request the leave and earn an average of at least £123 a week. This is in line with maternity pay entitlement. Your employee needs to take the neonatal care leave within the first 68 weeks after the birth.
National Minimum Wage Increase
National minimum wage is increasing on 1 April 2025. The changes are:
National Living Wage increases to £12.21
18–20-year-olds increase to £10 per hour
16–17-year-olds increase to £7.55 per hour.
The minimum wage increase is to narrow the gap between 18–20-year-olds and those over 21 years as the adult rate is expected to extend to 18-year-olds in future.
What is the difference between the national minimum wage and the national living wage?
The National Minimum Wage is what almost all workers should receive, and the National Living Wage is the minimum per hour that those aged 21 years and over should receive.
This is not to be confused with the Real Living Wage which is a voluntary scheme that businesses can join. The recommended real living wage from the Living Wage Foundation is currently £12.60 an hour outside London and £13.85 inside London.
Statutory Payments Increase
Statutory payments are also increasing this spring. The updates are:
Statutory Sick Pay rises from £116.75 to £118.75 per week
Statutory maternity pay, maternity allowance, shared parental pay, and parental bereavement pay increases from £184.03 to £187.18 per week.
The lower earnings limit for qualifying for statutory pay is also increasing by £2 per week to £125, except for the maternity allowance threshold which remains at £30 per week.
National insurance increase for employers
One of the most significant changes for employers is the increase in their national insurance contributions from 6 April 2025. Class 1 national insurance contributions threshold is lowered from £9,100 to £5,000 per year and the rate that an employer pays increases from 13.8 per cent to 15 per cent.
Plus, the rates for Class 1A and Class 1B contributions - the taxable benefits-in-kind - will also increase.
All employers will be able to access employment allowance and the maximum savings for employers will increase to £10,500. If you are a small business, this may be the first year you are eligible to claim employment allowance.
Employment Rights Bill
The Employment Rights Bill will be the biggest shake-up of employment law. At the time of writing, the Employment Rights Bill is still making its way through Parliament. If the bill receives Royal Assent before Parliament breaks up for the summer, then some of the bill may come into force in October 2025.
There are ways in which employers can start preparing for the changes now and we’ve outlined these below.
Recap on 2024 changes
Here are some of the key changes from last year and actions we recommend you put in place.
Preventing Sexual Harassment
There is a new proactive duty for employers to take reasonable steps to prevent sexual harassment in the workplace. Tribunals now have the power to uplift sexual harassment compensation by up to 25% where an employer is found to have breached this duty.
You may have seen this already hitting the news with all 1,400 McDonald’s branches receiving a letter from the equality watchdog warning them of their duty to actively prevent sexual harassment at work: McDonald's: Every branch in Britain warned over staff sexual abuse
Our advice is to make sure you’ve completed a thorough risk-assessment and have an action plan in place to put in any measures to reduce the risk of sexual harassment. We also recommend your managers are fully trained so they can be proactive in protecting the business and keeping it compliant.
Other changes from 2024:
Simplified holiday pay entitlement - holiday for people working irregular hours should now be calculated as 12.07% of actual hours worked in a pay period.
Increase in fines for employers of illegal workers to £45,000 for each illegal worker
Care leavers are entitled to one week of unpaid leave per year from day one
Flexible work requests from day one and employers must consult with the employee
Redundancy and family rights - extra protection for pregnant employees until up to 18 months after birth and priority status for redeployment
Paternity leave can now be taken in two non-consecutive blocks up to the end of the first year after childbirth or adoption
Tipping - must be fully and fairly distributed and have written policy available
eVisas will replace current biometric resident permits and from June 2025 be the place where employers check the right to work status.
You can read the full details of the 2024 employment law changes here.
How to prepare for 2025 employment law updates
Where pay and national insurance are involved, we recommend checking that your employees are on the correct pay rate from April 2025. You can also include these increases in your budget and resourcing planning.
Updates to contracts and handbooks are recommended to include all the recent changes. It is also worth reviewing what changes you may need to be compliant with the upcoming Employment Rights Bill.
For support with any updates and advice on how to manage the changes, get in touch to find out how Danton can help.