Employment Law Changes 2025 – What you need to know

Are you prepared for the upcoming changes to Minimum Wages and Statutory Payments? Don’t panic, you still have plenty time to put things in place as well as preparing for other planned changes. See my overview below and what steps you can take.

National Minimum Wage Changes (1st April 2025)

·       National Living Wage for over 21’s to increase from £11.44 to £12.21 per hour

·       National Minimum Wage for 18–20 year-olds to increase from £8.60 to £10.00

·       National Minimum Wage for 16–17 year- olds and Apprentice Rate to increase by 18% to £7.55

Please note, those signed up to the Voluntary Living Wage Foundation will have until 1st May to implement the new rate of £12.60 for all over 18’s (2025/26 Rates will be announced in November).  

Statutory Payment Changes (6th April 2025)

·       Statutory Sick Pay to increase from £116.75 to £118.75 per week

·       Statutory Maternity Pay and other family related leave pay to increase from £184.03 to  £187.18 per week

·       Lower Earnings Limit threshold increases to £125 per week

Employer National Insurance Increases (6th April 2025)

·       Employer NI rate will increase from 13.8% to 15%

·       Threshold for Employer Contributions lowered from £9,100 to £5000

This means that Employers will need to pay NI contributions on a greater portion of employees’ earnings.

BUT its not all bad news, to support small businesses the employment allowance (the relief that reduces how much NI Contributions small employers pay) will rise from £5,000 to £10,500. This should reduce the burden on smaller employers to ensure they remain sustainable.

Neonatal Care (Leave and Pay) Act 2023 (6th April 2025)

·       Confirmed as a Day 1 Right for Employees – with entitlement to Pay being in line with Maternity/Paternity Pay

·       Grants employees up to 12 weeks paid leave (if qualifies) if baby is admitted to hospital.

·       Applies to babies admitted within the first 28 days of their life with a continuous stay of 7 days or more

·       Leave is in addition to Maternity, Paternity and Shared Parental Leave Rights (in practice, could extend Maternity Leave by up to 12 weeks)

This entitlement will provide vital support for parents during what can be one of the most terrifying situations, meaning they can prioritise their baby’s care without worrying about taking time off or financial penalties.

Other Laws Expected but not yet Confirmed

The Paternity Leave (Bereavement) Act 2024 – expected to take effect in 2025 having received Royal Assent in 2024 but not confirmed. Will make it a Day 1 Right for Fathers and Partners to take Paternity Leave where the mother dies shortly after child’s birth or adoption.

Employment Rights Bill – Expected to receive Royal Assent May 2025 so will have more confirmation then but it is likely to include:

·       Removal of 3 day Qualifying Period for Statutory Sick Pay, meaning will be paid from first day of absence (and no lower earnings period)

·       Parental Leave and Paternity Leave expected to become a day 1 right

·       Bereavement Leave expected to become a day 1 right

·       Qualifying for Unfair Dismissal – Day 1 Right, proposal to remove 2 year qualifying period. Expected that there will continue to be a Probation Period.

·       Right to Guaranteed Hours for Zero Hour Workers

Draft Equality (Race and Disability) Bill – Extension to Pay Gap reporting for organisations with over 250 employees to report on ethnicity and disability.

As an Employer - what can you do to prepare?

1.      Review Employee Wages to identify who needs increased in line with new Statutory Minimums. Amend financial budgets to take account of these for the 2025/26 Financial Year. Issue letters to confirm the increases to the individuals effected. NOTE It is wise to review your full team wages in line with this, the increase in minimum wage can close gaps between team members who may have more experience and reduce their perceived value so sensible to consider this.

2.      Review your Family Friendly Policies to take account of the Neonatal Care (Leave and Pay) Bill 2023.

3.      Review your Disciplinary, Capability, Probation and any Performance Policies to ensure these are fit for purpose and Managers are aware of them in preparation for the Employment Rights Bill.

4.      Review your Recruitment Policies and consider your strategies for this, as it will become very important to hire with confidence once the Employment Rights Bill is implemented.

Being proactive and putting measures in place early will stop any panic or rush to get policies in place by deadlines, saving you and your Managers a great deal of stress knowing you are already covered.

For more information on any of these areas or support to put strategies in place to give you peace of mind, get in touch with Jenna today jenna@heartlandhr.co.uk or 07715 313 504