If you’re an employer, HR professional, or just someone who likes to keep ahead of the latest workplace changes, 2025 is shaping to be a big year for employment law. From new leave entitlements to rising payroll costs, there’s a lot to take in. And with some updates hitting as early as April, now’s the time to make sure you and your business are prepared.
The good news? You don’t have to navigate these changes alone. Here’s the lowdown of what’s coming and what it means for businesses.
April 2025: higher wages and rising employer costs
April brings the usual national living and minimum wage (NLW/NMW) and statutory pay increases, but this year’s changes are particularly significant:
- From 1st April 2025, businesses must prepare for the largest recorded increase in both the National Living Wage (NLW) and National Minimum Wage (NMW). The NLW will rise by 6.7%, increasing from £11.44 to £12.21 per hour. However, younger workers will see the most significant wage hikes, with 18–20 year olds receiving a 16.3% increase and under-18s seeing an almost 18% rise, as the government aims to align wage growth with the ongoing cost of living crisis.
- Employers must also account for increases in statutory payments. Statutory Sick Pay (SSP) will rise to £118.75 per week, while maternity, paternity, adoption, shared parental, and bereavement pay will all increase to £187.18 per week from April 2025.
Alongside these changes, employer national insurance contributions (NICs) will increase from 6th April.
The earnings threshold at which employers start paying NICs will drop from £9,100 to £5,000, meaning more of an employee’s earnings will be subject to NICs.
The employer NICs rate will increase from 13.8% to 15%, significantly raising payroll costs for businesses.
The same date also marks the introduction of the Neonatal Care (Leave and Pay) Act 2023, granting parents up to 12 weeks of paid leave if their baby requires neonatal care. This long-overdue change will provide vital support to families dealing with an unexpected hospital stay.
Employment Rights Bill: more worker protections on the way
The Employment Rights Bill (ERB) sets out a range of reforms aimed at strengthening worker protections, with many expected to take effect from 2026. A key focus is expanding day-one rights, including protection from unfair dismissal as well as entitlement to paternity, parental, and bereavement leave.
Statutory sick pay eligibility is also set to change, with plans to remove the lower earnings limit and scrap the waiting period - ensuring SSP is available from the first day of illness. Whilst these changes promise greater security and peace of mind for millions of workers who currently miss out under existing rules, it does also mean increased costs for businesses that previously relied on the exemptions. Labour also plans to do away with minimum age bands, likely affecting the 18-20 bracket, meaning all adults would be entitled to the same rate. Currently, there’s no confirmed start date, but the changes could have a major impact on sectors like retail, leisure, and hospitality, where younger workers make up a large share of the workforce, although further clarity is needed on how they will affect agency workers – including what constitutes "day one" entitlement and how regular earnings are calculated. In the meantime, the Recruitment and Employment Confederation (REC) will continue to work with the Government to ensure that the final legislation is fair and takes into account the unique nature of agency work.
Other proposed reforms include new restrictions on zero-hours contracts and fire-and-rehire practices, along with stronger protections for pregnant workers. The Government has already held consultations across some of these changes and plans to continue discussions throughout the year, although there’s no confirmed timeline yet. With so much in the pipeline, the REC has emphasised the need for clear guidance and a collaborative approach between employers and trade unions to ensure the bill’s measures are both practical and effective - so businesses should stay tuned and consider the potential cost implications as these reforms evolve.
Draft Equality (Race and Disability) Bill: a step towards stronger protections
Targeted for spring 2025, this bill aims to tighten protections against race and disability discrimination. While an exact date isn’t set, it’s a crucial update for businesses looking to bolster their diversity and inclusion policies.
Pensions Scheme Bill: more changes coming soon
The Pensions Scheme Bill is on the agenda, with some changes in the works for later this year. One idea is to let employers withdraw surplus funds from defined benefit (DB) schemes - a move that could certainly boost growth and enhance benefits, though these surpluses are mostly tied up in the largest schemes. More details are due in spring - so any day now!
Right to Switch Off: is it on hold?
The “right to switch off” has been gaining traction across Europe, with Ireland adopting it as a code of practice and Belgium even making it a legal requirement. Originally expected by 2026, the statutory code of practice was meant to guide how businesses handle out-of-hours work and promote work-life balance. However, recent updates (or a lack thereof!) suggest that the Government is no longer prioritising the issue.
What should employers do now?
Change can bring uncertainty, but it doesn’t have to be stressful. The key is preparation - reviewing policies, adjusting payroll strategies, and keeping an eye on the evolving employment landscape will help businesses stay ahead.
Not sure how these changes will impact your workforce? That’s where we come in. As a recruitment partner who understands the complexities of employment legislation, we help businesses stay compliant, competitive, and fully staffed - even in times of change. If you’re worried about workforce planning, let’s talk. Because the businesses that prepare now will be the ones that thrive in 2025 and beyond.
