2024 was a big year for employment law updates. And 2025 (and beyond) is already looking to match last year with ease; thanks to a new Labour government and the introduction of the Employment Rights Bill, which includes 28 individual employment law reforms that are designed to transform the world of work.
Big on the agenda is the introduction of ‘day one’ rights for paternity leave, parental leave and bereavement leave, as well as removing the two-year qualifying period for unfair dismissal claims. But let’s also not forget there’s proposed changes to statutory sick pay, zero-hours contacts, ‘fire and rehire’, and flexible working.
Virtually no area of UK employment law will be left untouched!
The good news is, much of this won’t become reality until Autumn 2026 at the earliest, but there are some important employment law changes that you need to be aware of (and act upon) now.
In this article, we will provide an overview of the key employment law changes happening from April 2025, including:
- The introduction of the Neonatal Care (Leave & Pay) Act 2023
- An increase to the National Minimum Wage
- Statutory Payment Increases
- National insurance increase for employers
- Pension Scheme Bill
- Other anticipated UK employment law changes in the pipeline.
So, let’s look at each of these employment law changes in more detail.
Neonatal Care Leave & Pay
This is THE big topic of the moment and a welcomed relief for any soon-to-be parent (after all, not employment law updates are bad).
The Neonatal Care (Leave & Pay) Act 2023 will come into effect on 6th April 2025, and is designed to give parents up to 12 weeks of paid leave if they have a baby (or babies) admitted into hospital before 28 days old and who have a continuous stay of seven days or more.
What’s even better is this is a day one right, meaning it is available to employees from their first day in a new job.
The amount of leave parents will be eligible for will depend upon how long the baby is in hospital. It is capped at a maximum of 12 weeks, with parents being able to take one week of leave in respect of each full week the baby receives neonatal care. NB: The week begins on the day after care started.
Did you know…
For 7 out of 10 families with a neonatal stay of over four weeks, at least one parent (usually the non-birthing parent) has to return to work while their baby is still sick in hospital (Source: Bliss)
So, here’s some of the technicalities:
- Eligible employees can receive Neonatal Care Leave in addition to other family entitlements (e.g., maternity, paternity, shared parental, etc.).
- Any leave must be taken within 68 weeks of the baby’s birth (or placement in the case of adoption).
- To qualify, the parent must have a minimum of 26 weeks of continuous service and be earning an average of £123 per week during the ‘relevant period’.
Employer actions
- Ensure you have a clear policy setting out employees’ rights to Neonatal Care Leave (and Pay), ideally, along with a template form to support the employee notification process.
- Consider the policy entitlements in light of any enhancements you’ve already made to other family leave (maternity, paternity, etc.), to ensure consistency in approach.
- Train line managers and HR professionals in this new statutory entitlement (as well as the other employment law changes coming into force).
- Ensure payroll systems are equipped to be able to accommodate Statutory Neonatal Care Pay.
National Minimum Wage Increase
The National Minimum Wage and National Living Wage will increase from 1st April 2025, rising by between 77p – £1.40 an hour to the following rates:
- £7.55 per hour for 16-17 year olds
- £7.55 per hours for apprentices
- £10.00 per hour for 18-20 year olds
- £12.21 per hour for those aged 21 and over.
Good to know…
The Living Wage Foundation, a charity that campaigns for fair wages, has increased their ‘real living wage’ to £12.60 per hour (£13.85 per hour in London). The rate is based upon an independent calculation of the current cost of living. This is a voluntary programme which employers may choose to commit to. Further information on the Living Wage Foundation is available here.
These increases (which equate to between 6.7% – 18%) are designed to support workers’ with the cost of living by offering a fair wage and real value.
Whilst these rate increases might not come as a surprise to many (we know to expect something each April), they do represent the largest increase on record for 18-20 year olds, which is believed to have been made in anticipation of the adult National Living Wage changing from those aged 21+ years to those aged 18+ years.
Employer actions
- Check which employees are affected by the hourly rate increase and make sure you’re paying employees correctly from the beginning of April to avoid any disputes, penalties, or reputational damage.
- Adopt a practice of reviewing pay in line with statutory increases each year.
Statutory Payments Increases
It’s not just the National Minimum Wage that sees an increase either.
From 06 April 2025, Statutory Sick Pay (SSP) will increase to £118.75 per week (from £116.75 per week).
At the same time, statutory family-related pay (i.e., maternity, paternity, adoption, shared parental, and parental bereavement) will increase to £187.18 per week (from £184.03 per week) for those who are eligible – subject to earnings levels.
This is with the caveat that:
- The first six weeks of statutory maternity leave are paid 90% of an employee’s average weekly earnings, with the following 33 weeks being paid at the lower of that rate or the statutory weekly maternity pay.
- Statutory paternity pay, shared parental pay, and parental bereavement pay will be paid at the statutory weekly rate, or 90% of the employee’s average weekly earnings, whichever is lower.
- Some companies may have their own enhanced sick or family-leave payments to take into consideration.
Further information on changes to statutory payments is available here.
Employer actions
- Check which employees are (or will be) affected by the increase to SSP and family pay and make sure you’re paying employees correctly from the beginning of April to avoid any disputes, penalties, or reputational damage.
- Write to any impacted employees confirming the statutory rate increases.
National insurance rise for employers
From 06 April 2025, National Insurance Contributions (NIC) rates for employers will rise from 13.8% to 15%. This follows Chancellor Rachel Reeve’s Autumn Budget announcement in October 2024.
The level at which employers start paying NICs will also reduce from £9,100 to £5,000 of an employee’s salary each year.
What this means is that an employer will pay NICs on £4,100 more salary per paid employee. It’s also likely to increase the scope of employees within the salary range, including many lower-paid and part-time workers.
Employer actions
- Consider way in which you may be able to offset some or all of the NIC costs, for example, introducing salary sacrifice schemes for pension contributions, outsourcing functions e.g., payroll, HR, marketing, etc., renegotiating supplier costs, changing/freezing recruitment plans, or (as a last resort) restructuring.
Pension Scheme Bill
In November 2024, the Government announced that it will be introducing a new Pension Scheme Bill in 2025. Of all the employment law changes, this is possibly not the most hotly anticipated, but it’s an important one none-the-less. The Bill is expected to include:
- Automatic consolidation of small deferred pension pots.
- A value-for-money framework for DC schemes.
- A requirement for occupational DC schemes to offer tailored retirement income solutions.
- A commercial DB superfund to enhance financial security for its members.
It’s also anticipated that a pensions dashboard will launch at some stage this year, allowing individuals to view all of their pension savings (including state pensions) on one platform. Quite simply, with the aim of improving transparency and empowing individual members to take control of their retirement planning.
Other anticipated UK employment law changes in 2025
The Government is expected to begin consultation on several key pieces of legislation shortly, (which will result in even more employment law changes coming our way!), including:
- Creating a single status of worker in a bid to create a simpler framework for employment status – moving from three categories (employee, worker and self-employed) to two categories (worker or self-employed).
- Introducing a statutory Code of Practice on an employee’s legal right to switch off/disconnect.
- Introducing a new Equality (Race and Disability) Bill focussing on pay gap reporting and equal pay rights for those with disabilities. The draft Bill is likely to be published this year.
- Removing the two-year qualifying period for protection against unfair dismissal.
- Removing the 26-week minimum service requirements for fathers and partners to be eligible to take paternity leave.
How we can help with employment law changes
If you would like advice on the UK employment law changes happening in 2025, please contact our team on 0330 223 5253 or office@fitzgeraldhr.co.uk. We would be delighted to help you.
