Recent & Upcoming Employment Law Changes 2025
The UK employment law landscape is set for significant changes in 2025, with updates affecting wages, employee rights, and employer responsibilities. Whether you’re an HR professional or a business owner, staying ahead of these updates will ensure compliance and help you manage your workforce effectively.
Here’s a breakdown of the key changes and what they mean for your organisation.
Crackdown on “Fire and Rehire” Practices
From January 2025, the UK government will introduce a statutory Code of Practice on “fire and rehire” tactics, which some employers use to impose new contractual terms.
Key elements include:
Employers must engage in genuine consultation before making changes.
If a tribunal finds an employer has acted unfairly, compensation could be increased by 25%.
Employer Considerations:
Any contractual changes must be carefully managed to avoid tribunal claims.
Businesses should ensure HR and legal teams are consulted before altering employment terms.
Open and transparent communication with employees is crucial.
National Minimum Wage and National Living Wage Increases
From 1 April 2025, the UK’s National Living Wage and National Minimum Wage will increase as follows:
Ages 21 and over: Rising from £11.44 to £12.21 per hour.
Ages 18-20: Increasing from £8.60 to £10.00 per hour.
Ages 16-17 and apprentices: Going up from £6.40 to £7.55 per hour.
What this means for employers:
Businesses must update payroll systems to reflect the new rates.
HR teams should review salary structures to ensure compliance.
Employers should assess budget impacts, especially for roles with a large proportion of minimum-wage workers.
We're here at hand to guide you through new legislation
Update Your Employment Contracts – Stay Compliant in 2025
With major changes in employment law coming into effect, now is the perfect time to review and update your employment contracts. From new rights to flexible working and predictable work schedules to increased employer obligations on holiday pay and harassment prevention, ensuring your contracts reflect the latest legal requirements is essential.
National Insurance Contributions (NICs) Changes
From April 2025, employer National Insurance Contributions will increase:
Employer NICs: Rising from 13.8% to 15%.
Threshold reduction: The earnings level at which NICs become payable will drop from £9,100 to £5,000.
Impact on employers:
This represents a higher cost for businesses, particularly those with large workforces.
Employers should factor this increase into budgeting and salary negotiations.
Small businesses with tight profit margins may need to review staffing strategies.
Holiday Pay and Record-Keeping Changes
From April 2025, employers must:
Keep detailed records of holiday entitlement and pay for six years.
Ensure correct calculations for part-year and irregular hours workers, following the Supreme Court ruling in Harper Trust v Brazel.
What this means for employers:
Payroll and HR systems should be updated to track holiday pay accurately.
Policies must be reviewed to align with new legal definitions of entitlement.
Employers using casual or seasonal workers must ensure their holiday pay calculations comply with the new laws.
Key Actions to Employers
To stay compliant and ahead of these changes, employers should:
- Update employment contracts and policies to reflect the new wage rates, flexible working rights, and record-keeping obligations.
- Train HR teams and line managers on handling flexible working requests, harassment policies, and predictable work schedule requests.
- Review payroll systems to accommodate wage increases and NICs changes.
- Implement strong harassment prevention measures and ensure employees know how to report misconduct.
- Plan for potential legal changes regarding ethnicity and disability pay gap reporting.
Employment law is shifting towards greater worker protections, higher wage expectations, and increased employer responsibilities. Being proactive will help businesses avoid legal risks, enhance workplace culture, and attract and retain top talent.
