UK workplace law changes in 2025

We set out key dates for your diary and the employment law changes you can expect to see in 2025, as well as steps to take to prepare for these.

There is a busy year ahead with upcoming employment law reforms being a key concern for employers in 2025. For our selection of the key issues which we believe will be particularly significant for employers, HR professionals and in-house lawyers this year, as well as looking ahead and planning for the employment reforms expected in 2026, see our Top 5 issues for HR in 2025.

Changes in 2025:

January

20 January 2025 - “Fire and rehire”: higher protective awards

From 20 January 2025, where an employer is found to have unreasonably failed to comply with the new “fire and rehire” Code of practice, protective awards can be increased by up to 25%. So employers could be ordered to pay a protective award of up to 112.5 days (uncapped) pay per affected employee.

The Code does not ban the practice of dismissal and re-engagement but encourages employers to enter into a dialogue with employees, or their representatives, to explore options before unilaterally seeking to dismiss and re-hire on new terms. 

What should employers do?

• Remember that this Code will be engaged as soon as you raise the prospect of dismissal and re-engagement (on revised terms), as a consequence of employees not accepting your proposed changes
• Consider the number of employees concerned, to determine whether the collective redundancy obligations apply when seeking to change terms and conditions.

April

1 April 2025 - National Minimum Wage increases

The new rates are:

• £12.21 per hour for workers aged 21 and over (up from £11.44 per hour)
• £10 per hour for 18 to 20 year olds (up from £8.60 per hour)
• £7.55 per hour for 16 and 17 year olds and apprentices (up from £6.40 per hour)

6 April 2025 - Employer National Insurance Contributions (NICs) increase

Employer NICs, which are the mandatory contributions an employer is required to pay for each of their employees by reference to their individual earnings, will rise from 13.8% to 15% of employee earnings from 6 April 2025. From the same date, the threshold at which employers start paying employer NICs on a worker's earnings will be lowered from £9,100 to £5,000 per year.

6 April 2025 – Statutory sick pay (SSP) increases

The weekly rate for SSP will increase to £118.75 (up from £116.75).

6 April 2025 – Tribunal compensation limits & Statutory redundancy pay increases

The new limits for unfair dismissal awards and the new redundancy pay rate (yet to be announced) will apply.

6 April 2025 – Statutory family pay increases

The weekly rates for statutory maternity, paternity, adoption and shared parental pay will increase to £187.18 (up from £184.03).

April 2025 - Paid Neonatal Care Leave

Eligible parents of babies who, within 28 days of birth, require specialist neonatal care for at least 7 days will be entitled to up to 12 weeks’ statutory neonatal care leave as a “day one” right, which must be taken within 68 weeks of the birth. This leave is in addition to existing entitlements such as maternity leave.

Parents with at least 26 weeks’ continuous service and earning above the lower earnings limit will also be entitled to Statutory Neonatal Care Pay.

Although the government has not yet confirmed this, this new right is expected to come into effect in April 2025, as planned by the previous government.

What should employers do?

• Look out for the new regulations setting out how this leave will work in practice
• Review and update your family friendly policies to include provision for neonatal care leave to ensure they provide for at least the minimum statutory entitlements

September

1 September 2025 - Failure to prevent fraud

This applies to “large employers” which means employers which meet two or more of these requirements: i) a turnover of over £36m; ii) total assets of over £18m; or iii) over 250 employees.

From 1 September 2025, where fraud is committed, large employers will be liable under a new corporate criminal offence of failure to prevent fraud - unless they can demonstrate that they had measures in place to prevent fraud by their employees or other associates. The guidance issued by the Home Office sets out the types of fraud covered by the offence and reasonable fraud prevention procedures that employers should undertake.

What should employers do?

• Update employment contracts and policies to cover the prevention of fraud and that failure to comply with the employer's requirements in this regard will be treated as a disciplinary matter which could lead to dismissal
• Carry out a comprehensive fraud risk assessment
• Monitor and review your fraud detection and prevention procedures

Financial services firms

Following its consultation into diversity and inclusion in financial services, the Financial Conduct Authority (FCA) will be publishing a policy statement in early 2025 with its rules on non-financial misconduct which are expected to come into force later this year. A further statement on its diversity and inclusion proposals is anticipated later in the year.

The FCA also plans to strengthen its messaging to whistleblowers and better promote whistleblowing reporting channels.

What should financial services firms do?

• Look out for the FCA’s policy statements
• Update your processes to take account of the new rules and diversity and inclusion proposals
• Assess whether your processes to tackle non-financial misconduct are effective
• Provide DEI training for staff that covers the risk areas identified by the FCA
• Handle complaints appropriately, with effective communication between HR and compliance
• Ensure you record non-financial misconduct accurately

Potential changes in 2025

Paternity bereavement leave

This new right will be a “day one” right - the 26-week minimum service requirement to be eligible for paternity leave will not apply for fathers and partners where the mother has died in the first year after birth or adoption. A bereaved parent of an adopted child, or intended parent of a child born through a surrogacy arrangement, will also fall within the scope of the new provisions. In addition:

• These bereaved parents will also be able to take paternity leave
• Where the child also dies (or is returned after adoption) the employee can still take leave 

There are also plans for paternity leave to be extended to 52 weeks for these bereaved partners.

What should employers do?

• Look out for details on further paternity bereavement leave rights, and the implementation date for this leave
• Thereafter, prepare a paternity bereavement leave policy which reflects the rights for bereaved partners

Trade union reforms

Some of the trade union reforms contained in the Employment Rights Bill are expected to come into force in 2025 – removing the following requirements which were introduced by the previous government:

• The minimum service level requirements for certain sectors
• The information and turnout requirements for ballots

What should employers do?

• Update your processes to reflect the changes to ballot and service level requirements, if applicable

For information about how we can help you prepare for these changes, please get in touch.