As 2025 begins, significant changes to employment law are on the horizon, introducing new responsibilities for employers and improved workplace rights for employees. For small and medium-sized enterprises (SMEs), staying ahead of these developments is crucial to ensure compliance and maintain a positive working environment. Below, we outline key updates and actions businesses should take to prepare.
Key Changes in Employment Law for 2025
1. Employment Rights Bill
The Employment Rights Bill aims to improve job security and workplace fairness. Notable proposals include:
Day-One Rights: Employees will gain immediate rights to parental, paternity, and bereavement leave.
Flexible Working as Default: Flexible working will be a standard right from day one, unless an employer provides a valid reason otherwise.
Sick Pay Changes: Removal of the lower earnings limit and waiting period for statutory sick pay.
Fair Contracts: Workers with consistent hours will be entitled to guaranteed-hour contracts after 12 weeks.
Ban on Fire and Rehire: This practice will be prohibited except under exceptional circumstances.
Action Point: Review and update policies to reflect these potential changes. Train managers on new dismissal and contract requirements.
2. Pay Gap Reporting
The draft Equality (Race and Disability) Bill will mandate pay gap reporting for ethnicity and disability in companies with 250+ employees, expanding on existing gender pay gap requirements.
Action Point: Start collecting and analysing pay data for ethnicity and disability. Implement corrective measures to address any identified disparities.
3. Right to Switch Off
A statutory code of practice will enforce the "right to switch off," ensuring employees are not contacted outside working hours except in emergencies.
Action Point: Establish clear communication policies that respect work-life boundaries. Develop training for managers and employees to align with this expectation.
4. Neonatal Care Leave
From April 2025, parents will be entitled to 12 weeks of paid leave if their baby requires neonatal care, supplementing existing parental leave rights.
Action Point: Update leave policies and educate employees on their entitlements.
5. National Minimum Wage and Statutory Payments Increases
Effective April 2025:
National Living Wage: Rising to £12.21 per hour.
Youth Minimum Wage: Significant increases for workers under 21.
Statutory Payments: Maternity, paternity, and sick pay rates will increase.
Action Point: Update payroll systems to reflect these changes. Communicate updates to employees to avoid confusion.
6. Employer National Insurance Changes
From April 2025:
Lower employer NICs thresholds will increase costs.
NIC rates will rise to 15%, but the employment allowance will increase to £10,500.
Action Point: Assess the financial impact on your business and explore ways to optimise budgets to absorb increased NICs costs.
Preparing for the Future
While many of these reforms will take full effect by 2026, consultations and preparatory steps in 2025 mean businesses should act now to avoid being caught off guard. Begin by auditing your existing policies, updating employment contracts, and providing training for managers to handle changes effectively.
How People Pulse HR Can Help
Navigating these changes can be overwhelming, especially for SMEs with limited resources. At People Pulse HR, we specialise in helping businesses like yours stay compliant and foster productive workplaces. Whether you need guidance on policy updates, employee training, or strategic planning, we’re here to support you.
Take proactive steps today - get in touch so we can ensure your business is ready for the challenges and opportunities 2025 will bring.
By staying informed and proactive, you can turn these legislative changes into opportunities to build a stronger, more equitable workplace.
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