UK Employment Legislation Changes 2025

The year 2025 is set to bring significant changes to UK employment laws, marking a shift toward stronger employee protections, better workplace fairness, and more inclusive policies.

These reforms reflect the growing recognition of the need for workplaces to keep pace with evolving social norms and the changing needs of workers.

For businesses, these changes are more than just legal updates, they present an opportunity to build stronger relationships with employees, improve workplace culture, and ensure that the organization is aligned with modern standards.

From the introduction of day-one rights for unfair dismissal to strengthened parental leave policies, these changes touch on many aspects of employment.

This UK employment legislation changes 2025 guide explores the most important changes, their impact on businesses, and practical steps that employers can take to stay compliant with these new laws.

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Significant Increase to National Minimum and Living Wages

The newly elected Government, as part of its pre-election commitments, announced changes to the Low Pay Commission’s remit to better align with fluctuations in the cost of living.

Effective from April, these updates will result in substantial pay increases for the country’s lowest earners:

• The National Living Wage (NLW) will rise from ￡11.44 to ￡12.21 per hour.
• The National Minimum Wage (NMW) will increase from ￡8.60 to ￡10 per hour.
• For workers aged 16-17 inclusive, the rate will increase from ￡6.40 per hour to ￡7.55 per hour
• The apprentice rate will increase from ￡6.40 per hour to ￡7.55 per hour

The significant rise in the National Living Wage reflects the sharp inflationary trends of recent years. However, with inflation now stabilizing, such steep increases are unlikely in the near future.

Meanwhile, the National Minimum Wage will see incremental adjustments in the coming years until it fully aligns with the National Living Wage.

National Insurance Employer Contributions Spike

The Autumn 2024 Budget also introduced notable changes to National Insurance:

• Employer National Insurance contributions will increase from 13.8% to 15%.
• The threshold for contributions will be lowered from ￡9,100 per year to ￡5,000.
• The Employment Allowance will rise from ￡5,000 to ￡10,500.

While the increase in contribution rates and the reduced threshold represent a significant cost burden for employers, the higher Employment Allowance aims to offset some of these expenses, offering particular relief to smaller businesses.

Proposed Employment Rights Bill (Major Reforms)

Building on their manifesto commitments and the King’s Speech, the Government introduced its Employment Rights Bill (“the Bill”) within the first 100 days of taking office.

Many of the proposed measures will be implemented through secondary legislation, with several requiring a consultation process before they can be finalized. Consequently, it remains too early to determine how certain provisions will operate in practice.

Alongside the Bill, the Government released a Next Steps document, which provides insights into the proposed legislation and outlines plans for future reforms. According to this document, consultations are expected to begin in 2025, making it unlikely that any major reforms will come into effect before 2026. Here are the major proposed changes:

1. Family Leave Policies

The UK’s family leave policies are undergoing significant changes in 2025, with new entitlements designed to support employees through important life events, such as the birth of a child or the need to care for a sick or premature baby.

These changes, expected to take effect in April 2025, aim to create a more inclusive and supportive work environment for employees at critical times in their personal lives.

What’s Changing:

1. Neonatal Leave: Parents of sick or premature newborns will be entitled to up to 12 weeks of neonatal leave, allowing them to take the time needed to care for their child during a challenging period.

2. Expanded Paternity and Maternity Rights: Paternity and maternity leave entitlements will be extended, providing more time for both parents to care for their new baby.

3. Increased Flexibility for Family Leave: The eligibility criteria for family leave have been simplified, making it easier for employees to access these benefits when they need them most.

While these changes emphasize inclusivity and employee well-being, they also require businesses to adapt their operations. For instance, extended absences may necessitate workforce planning adjustments or temporary hires.

How Employers Can Prepare:

• Update Family Leave Policies: Employers should review and update their family leave policies to reflect these new entitlements, ensuring that employees are informed of their rights.

• Develop Strategies for Managing Absences: Businesses should plan for extended family leave by developing strategies for covering workloads and maintaining productivity while employees are on leave.

• Communicate the Changes: It’s important for employers to clearly communicate these changes to their employees, ensuring they understand their new rights and can take full advantage of them.

2. Flexible Working Becomes a Day-One Right

Flexible working arrangements have long been considered a perk, but in 2025, they will become a right for all employees, from day one of their employment. This change acknowledges the growing demand for better work-life balance and the increasing number of employees seeking flexible or remote work options.

What Employers Need to Know

The introduction of day-one flexible working rights means that employers will need to be more adaptable in how they manage teams and structure jobs. This change reflects a growing cultural shift towards remote and hybrid working, with employees seeking the ability to balance their work and personal lives more effectively.

How to Adjust:

• Create Clear Flexible Working Policies: Employers should develop and implement policies that clearly outline how flexible working requests will be handled, including the criteria and decision-making process.

• Invest in Technology: Businesses should ensure their technology infrastructure is equipped to support remote or flexible working, including tools for collaboration, communication, and project management.

• Train Managers: Managers should be trained on how to manage remote and flexible teams effectively, ensuring that performance is tracked fairly and that employees feel supported, regardless of where they are working from.

Employers who embrace flexible working as a right rather than a privilege will be better positioned to attract and retain talent, improve employee satisfaction, and keep up with new workplace trends.

3. Fire and Rehire

“Fire and rehire” refers to the controversial practice where employers terminate employees and then offer them new roles with worse terms and conditions than earlier. This has been a widely criticised tactic, particularly in industries where businesses attempt to reduce labor costs by renegotiating contracts under duress.

From 2025, however, employers will be required to consult with employees before making significant changes to their employment contracts.

What Employers Need to Know:

The new rules on fire and rehire require businesses to have meaningful consultations with employees before altering key aspects of their employment. Employers can no longer just fire staff and rehire them under less favorable terms without first engaging in a fair and transparent process. The aim of this reform is to ensure that employees are treated fairly and that any contract changes are agreed upon mutually.

How Employers Should Adapt:

• Consult in Good Faith: Employers must engage in transparent and honest discussions with employees (and their representatives, where applicable) about any proposed changes.

• Provide Clear Justifications: Any proposed changes to terms or conditions should be clearly explained, and the reasons behind them must be sound and well-documented.

• Keep Records: Employers should document all consultation meetings, employee feedback, and any agreements or disagreements.

By adopting these measures, employers can avoid legal disputes and maintain positive relations with their employees.

4. Unfair Dismissal

Until recently, employees in the UK had to work for at least two years before they could claim unfair dismissal protection. This often left workers vulnerable to being dismissed without cause early in their employment.

Under the proposed reforms, the qualifying period will be replaced by a statutory probation period during which employers can dismiss employees through a streamlined “light touch” process. This process requires a meeting to outline concerns and allows the employee to bring a companion.

The government has indicated that the reforms will not take effect until autumn 2026, and further consultation will determine the length of the statutory probation period, which is currently suggested to be nine months. Employers can opt for longer contractual probation periods, but the “light touch” dismissal approach will only apply during the statutory period.

Redundancy dismissals will be excluded from the “light touch” framework, requiring standard processes from day one, although redundancy payments will still require two years of service. The reforms also expand employees’ rights to receive written reasons for dismissal after completing the statutory probation period.

What Does This Mean for Employers?

Employers will need to adapt their practices to comply with the new framework, which involves enhancing recruitment processes to ensure new hires are a good fit while keeping the process efficient and straightforward. Comprehensive onboarding and training programs will be essential to help employees perform effectively and minimize early-stage dismissals.

Managers should be equipped with the necessary tools and processes to evaluate employees thoroughly during probation, alongside receiving training on the “light touch” dismissal approach applicable during the statutory probation period, as well as the standard procedures required for terminations beyond that period.

Practical Steps for Employers:

• Increase Documentation: All dismissal decisions will need to be backed up with detailed records. This includes performance reviews, formal warnings, and any written communication related to the employee’s conduct.

• Review Hiring Practices: It’s important for businesses to ensure managers are trained on fair hiring practices and that they know how to manage probation periods with clear expectations and documented feedback.

• Train HR Teams: HR teams should be fully aware of the new regulations, especially concerning how to handle early-stage terminations and potential disputes.

This shift in the law aims to provide greater job security for employees and reduce the potential for exploitative practices. For employers, it represents an opportunity to build trust through transparent and fair management practices.

5. Addressing the Instability of Zero-Hours Work

Zero-hours contracts have long been a controversial topic in the UK. These contracts provide employers with flexibility, but often at the expense of workers who face uncertainty about their working hours and pay. The 2025 reforms aim to bring more stability to workers on zero-hours contracts by giving them the right to request more predictable hours after working a certain period of time.

What Employers Should Consider:

From 2025, employees on zero-hours contracts will be able to request a more predictable work schedule. Employers will be required to consider these requests seriously and respond to them within a reasonable timeframe. While zero-hours contracts can offer businesses flexibility, this reform aims to ensure that workers are not left in limbo regarding their income and job security.

Steps to Prepare:

• Review Existing Zero-Hours Contracts: Employers should assess whether zero-hours contracts are still the best option for their business needs, or if more structured contracts would better suit both parties.

• Develop Clear Processes for Requests: Employers should create a clear and transparent process for handling requests for more predictable hours. This should include timelines and criteria for how decisions will be made.

• Offer Flexibility Where Possible: While employers are not required to accept all requests, they should consider the requests seriously and only refuse them for legitimate, business-related reasons.

While this reform introduces new complexities, it also offers an opportunity for employers to demonstrate their commitment to fairness and worker well-being.

6. Strengthened Protections Against Sexual Harassment

The 2025 reforms also place increased responsibility on employers to prevent sexual harassment in the workplace. Rather than simply responding to complaints after the fact, businesses will now be required to take proactive steps to prevent harassment and create a culture of respect and accountability.

Key Highlights of the Reform

The 2025 reforms also place increased responsibility on employers to prevent sexual harassment in the workplace. Rather than simply responding to complaints after the fact, businesses will now be required to take proactive steps to prevent harassment and create a culture of respect and accountability.

• Employer Responsibility Amplified: Companies are required to take “all reasonable steps” to prevent sexual harassment, broadening the scope of liability.

• Third-Party Harassment: The reforms revive protections against third-party harassment, holding employers accountable for incidents involving customers, vendors, or other external stakeholders.

• Protection Against Retaliation: Employees reporting harassment are further safeguarded against victimization or adverse treatment.

Implications for Employers:

Organizations must transition from reactive to preventive measures. For example, instead of addressing harassment after it occurs, employers are expected to create environments that deter such behavior. Failure to comply with these requirements could lead to increased tribunal claims and reputational damage.

Steps to Implement Preventative Measures:

• Develop Comprehensive Policies: Clearly define unacceptable behavior, reporting procedures, and consequences.

• Conduct Regular Training: Equip employees and managers with tools to recognize and respond to harassment.

• Establish Confidential Reporting Channels: Ensure victims feel safe reporting incidents without fear of reprisal.

• Monitor and Audit Workplace Culture: Regularly assess workplace dynamics to identify and mitigate risks.

By prioritizing a culture of respect and accountability, these reforms aim to create safer workplaces, thereby boosting employee trust and organizational reputation.

How Beyond Borders HR Can Help You

The 2025 changes to UK employment law can seem complicated, but Beyond Borders HR is here to help. We specialize in helping businesses understand and implement these updates so that they stay on the right side of the law. Whether it’s new rules on unfair dismissal, flexible working, or family leave, we can guide you through the changes and make sure your policies reflect the latest requirements.

Need help with UK employment legislation?

Book a Free Consultation with us

At Beyond Borders HR, we’ll help you make the transition smooth and simple, so you can focus on running your business. Get in touch with us today to see how we can support you.