In the wake of last year’s general election, 2025 was widely anticipated to be a year of significant change for employment law.
Whilst the raft of proposals contained within the new Employment Rights Bill raised eyebrows in some quarters, little did we know that it would be the Autumn budget that would grab the headlines for Labour, and not necessarily in a good way.
Whilst drafting this article, the news broke of supermarket chain Sainsbury’s cutting 3,000 jobs, a move thought to be, at least in part, owing to the upcoming rise in Employers National Insurance. Sainsbury’s have stated that the April rise will cost them approximately £140m.
Sainsbury’s concerns are being mirrored by many of my clients throughout the UK, with numerous businesses stating they are ready to implement redundancy measures and restructure their operations to manage escalating operational costs.
2025 is certainly shaping up to be a difficult year for businesses and below we cover some of the upcoming changes to keep an eye on throughout the year.
1 April 2025: The first real change of the year takes place on 1 April with the rise in minimum wage. Labour have been clear that they want a single minimum wage for adults, and we are therefore seeing a large 16% increase in minimum wage for 18-20 year olds this year to close the gap on those aged 21+. The full increases are as follows:
- aged 21 and over – £12.21 (from £11.44);
- 18–20-year-olds – £10.00 (from £8.60);
- 16–17-year-olds – £7.55 (from £6.40);
- Apprentices – £7.55 (from £6.40).
6 April 2024: A raft of changes are proposed for 6 April, including the annual increases in Statutory Sick Pay (£118.75) and maternity, paternity, adoption and shared parental pay (all £187.18).
We are also expecting the introduction of new rights for neonatal care. Whilst we are still awaiting full details, we understand that the new right will allow individuals whose child requires medical treatment before they are 28 days old (and lasts for at least 7 days) the right to up to 12 weeks’ leave. Eligible employees with at least 26 weeks service will also be entitled to a statutory payment during any such leave.
6 April also sees the big one, the rise in the rate of secondary Class 1 employer National Insurance contributions taking effect (“NIC”). If your business has not budgeted for this, you should do so now. NIC will increase from 13.8% to 15%, with a double whammy of the threshold at which employers become liable to pay NICs on employees’ earnings reducing from £9,100 to £5,000. There is some good news, however, in that the Employment Allowance will increase from £5,000 to £10,500, giving at least something back to employers. The eligibility threshold for the Employment Allowance will also be scrapped, allowing employers with NICs liabilities of over £100,000 to claim the allowance. Speak to your accountants to ensure your business is taking advantage of this change.
Date TBC: Initially scheduled for April 2025, we expect to see new rights this year for fathers or partners where the mother or primary adopter of a child has died. We are awaiting confirmation of full details for this new Parental Bereavement offering, including an implementation date.
Date TBC: 2025 will also see the Employment Rights Bill pass into law, introducing no less than 28 new employment measures. We anticipate that the vast majority of the measures will be delayed until 2026, including the day 1 right to unfair dismissal which we believe will arrive no earlier than Autumn 2026. Certain measures such as changes to paternity leave, bereavement leave and zero hour contracts should make it through in 2025. The latest we are hearing on the changes to SSP (making it a day 1 right rather than the current 4 day waiting period) is that government are having second thoughts on introducing this immediately, given the reaction from employers already facing additional costs from National Insurance increases. We will be keeping on top of these changes and alerting clients through our monthly newsletters as and when changes are announced.
Date TBC: We expect the Equality (Race and Disability) Bill to be passed later this year, however it is likely to be 2026 before implementation. Whilst we are yet to see details of the bill, we anticipate it will extend the current mandatory gender pay reporting to include ethnicity and disability. We believe it will also extend the scope of equal pay claims to ethnicity and disability.
Date TBC: one measure missing from the Employment Rights Bill was the much loved headline grabbing “right to switch off”. It was proposed that legislation would be introduced limiting the amount of contact employers could have with employees out of hours. We understand this will be scrapped, however it will likely reappear in some form under ACAS guidance.
2025 promises notable shifts in UK employment law, driven by the new Labour government’s pledge to strengthen worker protections. With many businesses already warning of a turbulent year ahead, preparation is going to be key. Proactive budgeting, planning and policy reviews will put your organisation in the best position to face the challenges ahead.
