Why businesses need to prepare now for upcoming employment law changes
Alison Whitfield (Assoc CIPD)
Senior HR & People Leader helping small businesses become amazing workplaces ?? Here for Merge & Acquisition Support | Business Transformation | Employee Engagement | Management Coaching | End-to-End Strategy ??
2025 is shaping up to be a year of significant change for employment law in the UK. With the Labour government in its first full year in power, business leaders need to stay ahead of legislation updates that will impact hiring, workplace policies, and employee rights.
We are now 6 months on from the election and the Employment Rights Bill, published in October 2024, outlines 28 key reforms aimed at boosting job security, pay, and productivity. While many changes won’t take full effect until 2026, consultations are already beginning.
So why should businesses pay attention now, rather than waiting to see what lands?
Government consultations means heightened awareness among employees, potential challenges to current practices, and the need for businesses to start preparing now. Many of the changes will come onto employee radars through news articles which may not be fully accurate or could be written with an agenda in mind - so let's break down the facts and steer clear of the clickbait.
What's on the agenda in 2025/26?
National Minimum Wage & Employer Costs
From 1 April 2025, the National Minimum Wage will increase:
- ￡12.21 for workers aged 21+
- ￡10.00 for 18-20 year-olds
- ￡7.55 for 16-17 year-olds
Additionally, businesses should expect statutory sick pay and maternity payments to rise, alongside higher National Insurance contributions for employers.
What to do now:
?? Consider the costs. The P&L will look different from April and businesses must understand the impact.
?? Introducing a salary sacrifice scheme can help you reduce your NIC bill by allowing employees to take lower salary in exchange for non cash benefits. Employees also save income tax and National Insurance on the sacrificed amount.
?? Review and revise workforce planning strategies. For example:
Day-One Employment Rights -
One of the biggest shifts is the removal of the two-year qualifying period for protection from unfair dismissal. This is expected to mean that employers must provide clear reasoning for dismissals and show fair process to avoid claims leading to settlements or tribunal. While the change is not expected to be in place until next year, the hires you make over the next 12 months could be critical.
What to do now:
??Review recruitment practices to ensure your business investing in getting the right people on board.
??Processes and procedures around probation will need to be robust and well understood amongst management teams.
?? Ensure job advertisements and internal descriptions accurately reflect the work you expect people to complete, and the metrics they'll be managed against.
Employees will also gain day-one rights to:
- Paternity leave
- Parental leave
- Bereavement leave
This means businesses will no longer have the flexibility of a probationary period before these rights kick in. Employers must prepare for a potential increase employee relations issues, formal disputes related to dismissals and terminations and also increased costs.
领英推荐
Statutory Sick Pay & Flexible Working -
The government is removing the lower earnings limit and four-day waiting period for statutory sick pay (SSP). More employees will qualify for SSP from their first day of work. Additionally, flexible working will become a default right from day one unless an employer can prove it’s unreasonable.
This shift requires organisations to rethink their workforce models and policies around remote and hybrid work.
What to do now:
?? Review sick pay policies and ensure they are fair, inclusive and realistic for your business's budget
????♀? Check out your data - How much SSP did you pay last year? What would you have paid with the removal of the 4 day waiting period? Can you afford this again once the rules change?
???? Think about the wellbeing of your people. Are there trends in reasons for sickness? Are you encouraging a culture of flexibility, openness and support which may combat some of these absences?
Equality & Pay Gap Reporting -
The government is strengthening equal pay rights for disabled individuals and ethnic minorities to simplify the claims process. Companies with over 250 employees will be required to report ethnicity and disability pay gaps, expanding on existing gender pay gap reporting.
What to do now:
?????? Complete a compensation review across all roles and identify any issues with unequal pay now, and review how/when you can resolve these.
?? Employers must be ready to collect and disclose this data transparently so think about how clean and accessible your data is.
The ‘Right to Switch Off’ -
Although absent from the Employment Rights Bill, the right to disconnect from work outside of hours will be introduced via a statutory code of practice. While not legally binding, it will set expectations that employees should not be contacted outside of working hours unless absolutely necessary.
What to do now:
? Think about how working hours and rest are viewed in your business and is this how you want things to stay?
?? Open the conversation with leaders and managers around the right to switch off and make sure you understand risk areas that might show up when you come to implement new policies
?? Read more about other countries who have implemented these practices here
New Parental Leave for Neonatal Care -
Starting in April 2025, parents will get up to 12 weeks of paid leave if their baby is admitted to hospital within 28 days of birth and stays for at least 7 days. This leave is in addition to existing parental leave entitlements.
What to do now:
???????? Think about the demographics of your team. Is there anyone expected to go on parental leave soon?
?? Consider the costs. We always hope nobody's child will become ill, but this new law means that businesses may incur additional costs that you need to be prepared for.
?? Schedule updates to handbooks and policies to reflect the new legislation.
With these changes on the horizon, proactive planning is key. The worst thing businesses can do is wait until new laws are in full force before adapting policies and practices, as this will only result in sudden impact to the financials and reputation of the business.
HR and Leadership teams are likely to feel stretched and pressured during this time and being able to access flexible, reliable people strategists while still being sensible with cost will be critical.
If you'd like a no-obligation chat about how your business can benefit from fractional people and HR support, let's chat >> Book time with me here ?