Employment Law Changes in 2025
2025 is to be a significant year with some key changes and reforms within the workplace which impact on individuals and businesses alike. With Labour now the ruling party, significant changes have been announced in Employment Law.
National Minimum Wage
The national living wage is increasing from £11.44 an hour to £12.21 an hour giving a boost of £1,700 for full-time workers over the age of 21. National Minimum wage for younger workers aged 18 -20 will also increase to £10 an hour – a £1.40 hourly pay rise. In addition, National Insurance will also be cut from 10% to 8%. This will save those on an average salary of £35,000 over £450 a year.
Introduced in October 2024, the Employment Rights Bill is set to overhaul Employment Law in the UK as we know it. While it has not yet been adopted, it is highly anticipated that it will pass if voted on by both Houses of Parliament.
Though it is difficult to anticipate exactly when the Bill will become law, several changes in Unfair Dismissal claims, Zero Hour Contracts, Flexible Working and Sexual Harassment will be coming.
Holiday Pay and Changes on the statutory Code of Practice
Employers with a January – March annual leave year will now be able to implement rolled-up holiday pay for part-year and irregular hour workers. This is set to be a significant change which is due to come into force in January 2025, and Employers will be able to include an additional amount with every payslip, covering a worker’s holiday pay, as opposed to paying holiday pay when a worker takes annual leave.
From 20th January 2025, the current 25% uplift for failing to comply with the statutory Code of Practice on Dismissal and Re-engagement (also known as Fire and Re-Hire) will now extend to protective awards. Essentially, this means that Employers who propose changes to an employee’s terms of contract via dismissal and re-engagement affecting 20 or more employees must properly consult these employees, or face protective awards of up to 90 days’ pay, with an additional 25% uplift for non compliance.
Statutory maternity, paternity, adoption and shared parental pay will go up nominally from £184.03 to £187.18 a week. The earnings threshold for these payments – except for maternity pay – will also go up from £123 to £125 a week.
The threshold for maternity allowance will remain at £30 per week.
Statutory parental bereavement pay, paid to individuals who need to take time off work if their child dies or there is a stillbirth, will also go up to £187.18 a week.
Statutory sick pay will rise from £116.75 per week to £118.75.
Employees on carer’s allowance will see their weekly earnings threshold rise from £151 per week to £196, and the weekly payment will go up from £81.90 to £83.30. This means they can work up to 16 hours per week on the national minimum wage alongside caring responsibilities.
These rate changes are expected to come into effect from April 2025.
Neonatal Care Leave and Pay
The introduction of neonatal care leave and pay is expected take place in April 2025. The changes are expected to give Employees time off when a baby under their responsibility requires hospital neonatal care.
Paternity Leave (Bereavement)
The highly anticipated changes in Paternity Leave are due to come into force by April 2025, following the Paternity Leave (Bereavement) Act 2024. These new regulations will grant fathers and non-birthing partners access to paternity leave if the mother or adoptive parent dies, and could potentially offer up to 52 weeks of leave from day one of employment.
Children’s Employment Reforms
A highly significant bill, The Children’s Wellbeing and Schools Bill, introduced in December 2024, has proposed several changes to child employment laws in the UK. Work permits are to be made mandatory for all employed children under compulsory school age, extended Sunday working hours to match Saturday allowances, and the permission to work up to one hour before school and until 8pm.
Equality (Race and Disability) Bill
Earlier in 2024, the government committed to introducing a draft Equality (Race and Disability_ Bill, during the Kings Speech. While this is yet to be introduced, the Bill is expected to tackle pay discrimination at work and to introduce mandatory reporting for employers with 250 or more employees, who will be required to report and publish their ethnicity and disability pay gaps.
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