As we approach 2025, significant changes in employment law are on the horizon. These updates will require HR professionals and employers to make necessary adjustments to ensure compliance and support their workforce effectively. With 2024 already introducing numerous changes, 2025 is set to continue this trend, bringing additional modifications that employers must address. The new laws are designed to improve protections for employees while also simplifying some administrative processes for employers. Staying ahead of these changes will be essential for maintaining a legally compliant and supportive work environment.
Rolled-Up Holiday Pay for Irregular Hours and Part-Year Workers
Starting January 1, 2025, a new system for rolled-up holiday pay will be introduced for workers with irregular hours and part-year workers. This method allows employers to correlate the amount of annual leave directly with the time worked within the leave year, simplifying leave calculations. However, it is important to note that this method remains unlawful for standard employees, who must receive holiday pay when they take their leave. Employers with leave years running from January to December can apply this new system, which aims to streamline the process and reduce administrative burdens. HR professionals must ensure they understand the specifics of this change and implement it correctly to avoid potential legal issues.
Simplifying leave calculations can significantly reduce the administrative work involved in managing holiday pay for employees with irregular working patterns. For many organizations, especially those in industries like hospitality, retail, and temporary staffing, this can be a welcome change. However, careful attention must be paid to the legal distinctions, making sure standard employees continue to receive holiday pay appropriately. Failure to comply with these rules could result in costly penalties and damage employee relations. It is crucial for HR departments to update their payroll systems and communicate the changes to affected workers to ensure a smooth transition.
Increased Compensation for Illegal Fire and Rehire Practices
In 2024, a new statutory code of practice on fire and rehire was introduced, emphasizing negotiation and compromise over dismissal threats when changing employee terms and conditions. The practice of fire and rehire has been a contentious issue, leading to increased scrutiny and the need for more protective measures for employees. From January 20, 2025, employment tribunals can uplift compensation claims by up to 25% for failing to follow this code. This significant increase in compensation highlights the necessity for employers to adhere to the correct procedures. HR professionals must be well-versed in the new code of practice and ensure that any changes to employee terms and conditions are handled appropriately to avoid costly tribunal claims.
The increased penalties for improper fire and rehire practices serve as a strong deterrent against using dismissal threats to force unfavorable changes in employment terms. Employers are encouraged to engage in meaningful negotiations with their employees, fostering a more collaborative and fair work environment. This approach not only complies with legal standards but also helps in maintaining positive employee relations and minimizing disruption in the workplace. Proper training for HR staff and thorough documentation of all negotiations and changes will be essential to ensure compliance with the code of practice and protect against potential claims.
Updates to the National Minimum Wage
April 2025 marks the start of the new fiscal year, bringing updates to the national minimum wage. The National Living Wage will increase to £12.21 per hour, with rates for younger workers also rising. Specifically, 18–20-year-olds will be entitled to £10 per hour, and those over compulsory school age but under 18 will receive £7.55 per hour. Apprentices under nineteen or in their first apprenticeship year will also receive £7.55 per hour, while other apprentices will be entitled to their standard age-related rate. Employers must ensure they are prepared for these changes and adjust their payroll systems accordingly to comply with the new rates.
Implementing these wage increases will require employers to review their current pay structures and budgets to accommodate the higher rates. Additionally, maintaining compliance with the new minimum wage standards is crucial to avoid potential legal issues and penalties. Proper communication with employees regarding the changes in their pay rates will also be essential to ensure transparency and maintain trust. Employers should review their payroll systems and processes to ensure they can accurately reflect the updated wage rates and make necessary adjustments in a timely manner.
Changes to Statutory Payments
In April 2025, statutory payments are expected to be updated. Statutory Sick Pay (SSP) will increase to £118.75 per week, and Statutory Maternity Pay (SMP), along with other family leave payments, will rise to £187.18 per week. The Lower Earnings Limit will also increase to £125 per week, impacting eligibility for statutory payments. These updates reflect the ongoing efforts to provide better financial support for employees during periods of illness or family leave. HR professionals must stay informed about these updates and ensure that their payroll systems are adjusted to reflect the new rates. Proper communication with employees regarding these changes is also essential to maintain transparency and trust.
The increase in statutory payments will provide employees with better financial support during times when they are unable to work due to illness or family responsibilities. This can help reduce financial stress for employees and promote a healthier work-life balance. Employers will need to ensure that their HR and payroll staff are well-informed about these changes and equipped to implement them correctly. This includes updating payroll software, adjusting payment calculations, and ensuring all relevant policies and procedures are up to date.
Introduction of Neonatal Care Leave
The Neonatal Care (Leave and Pay) Act 2023 introduces neonatal care leave, effective April 2025. Parents of babies admitted to the hospital before 28 days old for at least one week will be entitled to neonatal leave. This leave allows parents to take a week off for every week their baby is in the hospital, up to a maximum of 12 weeks, and will be paid at the statutory rate. This leave will be a day-one right, meaning employees not entitled to statutory paternity leave might still qualify for neonatal leave, which employers cannot deny. HR professionals must ensure they understand the specifics of this new leave entitlement and update their policies accordingly.
Neonatal care leave will provide crucial support for parents during challenging times, allowing them to focus on their family without the added stress of financial concerns. This legislation underscores the importance of creating a supportive and compassionate work environment. Employers must update their leave policies and ensure that managers and HR staff are aware of the new entitlements and procedures for requesting neonatal care leave. Clear communication with employees about their rights and the process for accessing this leave will be vital to ensure awareness and smooth implementation.
Paternity (Bereavement) Leave
Another expected update for 2025 is the introduction of paternity (bereavement) leave. The Paternity (Bereavement) Leave Act 2023 grants fathers and non-birthing partners paternity leave from day one of employment if the baby’s mother dies. The legislation also aims to extend paternity leave to match the length of maternity leave in such circumstances. Employers must be prepared to support employees through these difficult times by providing the necessary leave entitlements. HR professionals should update their leave policies and ensure that employees are aware of their rights under this new legislation.
Paternity (bereavement) leave recognizes the significant impact of maternal loss and the need for adequate support for fathers and non-birthing partners. This leave will provide much-needed time for grieving and adjusting to new family dynamics without the pressure of returning to work prematurely. Employers must ensure that their HR policies are updated to reflect this new leave entitlement and that staff are trained to handle requests for paternity (bereavement) leave with sensitivity and empathy. Clear communication about the availability and process for requesting this leave will help employees feel supported during challenging times.
Employment Rights Bill and Day-One Rights for Unfair Dismissal
As the year 2025 approaches, notable shifts in employment law are anticipated. These upcoming changes will necessitate that HR professionals and employers make the required adaptations to ensure they remain compliant and continue to effectively support their workforce. The year 2024 has already seen many updates, and 2025 is expected to follow suit, introducing further amendments that businesses must address. These new regulations aim to enhance employee protections and, at the same time, streamline some administrative processes for employers. It is crucial for businesses to stay proactive about these changes to maintain a legally compliant and supportive work environment. This proactive approach will not only help in adhering to the law but also in building a workplace where employees feel secure and valued, thus fostering a more productive and harmonious organizational culture. Companies that invest in understanding and implementing these changes are more likely to benefit from reduced legal risks and improved employee morale.