New Year, New Rules: Employment Law Changes in 2025

Is your business ready for the Employment Law changes coming in 2025?

As we settle into 2025, it’s time we look at Employment Law updates that could affect your business. From adjustments in wages to changes in employee rights, staying informed and proactive is crucial for ensuring your business remains compliant.

At Alpha HR, we’ve created a concise guide on some key Employment Law changes set to take effect in 2025, helping you navigate the landscape with confidence.

 

Rate Changes:

The 2025 Employment Law changes will include the usual set of rate changes. Most will take effect in April 2025, and include the following:

 

National Minimum Wage:

The national minimum wage increase will come into force on 1 April 2025, bringing changes that will impact employers and employees alike.

 

Statutory Payments Increase:

Statutory payments are legal entitlements provided to employees in specific circumstances such as illness, maternity, paternity, or bereavement. Starting from April 2025, several statutory payment rates will see an increase:

• Statutory Sick Pay (SSP): The weekly rate will rise from £118.75 (up from £116.75)
• SMP, Maternity Allowance, SPP, ShPL Pay, and Parental Bereavement: The weekly rate will increase to £187.18 per week (up from £184.30)
• Lower Earnings Limit: The weekly earning threshold to qualify for these payments (excluding Maternity Allowance) will increase by £2 to £125, while the threshold for Maternity Allowance will remain at £30 per week.

 

Gender Pay Gap Reporting

Coinciding with the Employment Law Rate Changes, the Gender Pay Gap reporting deadline is approaching.

Under Gender Pay Gap regulations, private sector employers and voluntary organisations with over 250 employees at the company or entity level must publicly disclose various gender pay information and ratios by the 4 April 2025, with the snapshot date of 5 April 2024.

For most public authority employers, the reporting deadline is earlier, set for 30 March 2025 and the snapshot date for 31 March 2024.

Make sure your business is prepared to meet these deadlines to avoid non-compliance penalties!

 

New Labour Government: Upcoming Employment Law Changes

Following the new Labour Government’s stated commitment, an Employment Rights Bill was introduced, marking a significant shift in employment law.

 

Employment Rights Bill

The Employments Rights Bill, introduced on 10 October 2024, presents a number of substantial reforms to a range of measure, including:

• Unfair Dismissal as a “Day One” Right,
• Ending Fire and Rehire,
• Ending Zero Hour Contracts,
• Statutory Sick Pay,
• Sexual Harassment,
• Redundancy, Collective Consultation, and
• Paternity, Parental and Bereavement Leave.

For a detailed overview, see our previous article The Employment Rights Bill 2024: Key Reforms and the Next Steps.

 

The Next Steps to Make Work Pay Document:

Shortly after the Bill’s introduction, the Government released the “Next Steps to Make Work Pay” document, outlining additional potential reforms. This publication provides further insights into the Government’s broader employment strategy.

For more details, refer to our previous article, The Employment Rights Bill 2024: Key Reforms and the Next Steps.

 

National Insurance Contributions

From 6 April 2025, the Government are implementing changes to Employer National Insurance Contributions (NICs), including two significant tax increases.

• Lower Threshold: The secondary Class 1 National Insurance (employer) threshold will be reduced from £9,100 to £5,000.
• Higher Rate: The main rate of secondary Class 1 Nation Insurance (employer) Contributions will increase from 13.8% to 15%.

To help mitigate the impact on small businesses, the Government is enhancing the employment allowance in two key ways. It will become available to all employers, removing the restriction that limits it to those with an annual employer NICs liability below £100,000. The employment allowance will rise from £5,000 to £10,500 per annum.

 

Pensions Scheme Bill

The Government announced on 13 November 2024, that it will be introducing a new Pension Schemes Bill in 2025, the Bill aims to introduce:

• Consolidation Small Pension Pots,
• Introduce a ‘Value for Money’ Framework,
• Provide Retirement Income Solutions,
• Consolidate Defined Benefit Schemes,
• Reaffirming the Pensions Ombudsman Authority (TPO), and
• Amending End-of-Life Rules.