Employment law changes for 2025: what employers need to know
As we kick off the new year, it’s crucial for businesses to stay ahead of the curve when it comes to employment law changes.
Significant updates are on the horizon, with some taking effect this year and others setting the stage for 2026. Legal experts at Irwin Mitchell have highlighted key developments that HR professionals and line managers should prepare for in the months ahead.
The upcoming employment rights bill represents one of the most significant overhauls of employment law in recent years. While many changes won’t come into effect until 2026, organisations must start planning now to adapt their policies, budgets, and operations. These changes will impact employee rights, pay structures, and how organisations manage redundancies, family leave, and workplace practices.
Key changes to prepare for in 2025
Pay and wages
- National minimum and living wage
From April, the national living wage for workers aged 21+ will rise by 6.7%, bringing it to £12.21/hour. Younger workers and apprentices will also see record increases, with the apprentice rate rising 18% to £7.55/hour. - National insurance contributions
Employers will face a 1.2% increase in national insurance rates, with the threshold for contributions lowering to £5,000/year. However, smaller businesses will benefit from an increased employment allowance of £10,500.
Holiday and holiday pay
New rules will simplify holiday pay for workers with irregular hours. From April 2024 (and now impacting many businesses), holiday pay for zero-hour and part-year workers will accrue at 12.07% of hours worked. Employers can also roll up holiday pay, provided it’s clearly itemised on payslips.
Family rights
- Neonatal care leave
Parents of babies requiring neonatal care will be entitled to up to 12 weeks of paid leave, expected to take effect from April. - Bereavement and paternity leave
New rules will remove eligibility restrictions for fathers and partners taking paternity leave following the death of a mother or adoptive parent within the first year of a child’s life.
Collective consultation
- Trigger for collective consultation
Employers must now count redundancies across all sites, not just single establishments, when determining if collective consultation is required. - Protective awards
From 20 January, tribunals can increase or decrease protective awards by up to 25%, depending on whether employers or employees follow relevant codes of practice during consultations.
General employment rights
While many provisions in the employment rights bill won’t take effect until 2026, some important updates will be implemented this year, including changes to:
- Collective consultation triggers
- Legislation surrounding industrial action and trade unions
Looking ahead
2025 is shaping up to be a pivotal year for employment law, and businesses are encouraged to engage with consultations and prepare for changes now.
What should employers do?
- Review and update budgets to account for increased wages and national insurance rates
- Engage with consultations on new laws that could impact your industry
- Update policies on holiday pay, family leave, and redundancy processes
These changes are more than just compliance updates – they reflect the evolving nature of work and the importance of protecting employees’ rights. Staying informed and proactive is key to navigating this transitional period successfully.
For more detailed insights, visit Irwin Mitchell’s guide to employment law changes for 2025.
