2024 was a jam-packed year for employers, seeing more changes to employment law than we have seen for a long time. As we head into 2025, it is showing no signs of slowing down. While new changes may be announced throughout the year, there are many changes we already know are coming, which HR professionals can get ahead of.
Here is a breakdown of some of the changes to be aware of and begin preparing for in 2025.
Rolled-up holiday pay
As of 1st January, employers will be able to use the rolled-up holiday method for irregular hours workers and part-year workers with a leave year running from January to December. On top of this, employers may also implement the new holiday accrual system for these workers, which correlates the amount of annual leave directly to the amount of time worked in the leave year.
Whilst these changes were first introduced in April 2024 for those with a leave year beginning in April, a phased approach has allowed employers to coincide the change with the start of their leave year.
Employers should be aware that using ‘rolled-up holiday pay’ for any other types of workers is technically unlawful. So, your standard employees must be paid holiday pay at the time they take their holiday.
Fire and rehire
Also in January, there will be a significant increase to the amount of compensation awarded to employees who have been subject to illegal fire and rehire processes.
A new statutory code of practice on fire and rehire came into force in 2024. This sets out practical steps employers should follow when changing employee terms and conditions. The steps focus on negotiation and compromise where possible from the employer to encourage an employee to agree to the new terms, rather than using the threat of dismissal as the single bargaining tool.
From 20th January, employment tribunals will have the ability to uplift compensation for protective award claims by up to 25%. This will be applicable in cases where consultation requirements have not been complied and where businesses have failed to follow the statutory code of practice introduced in July 2024. It is therefore essential for employers to familiarise themselves with the process going into the new year.
National minimum wage
After a couple of quiet months in February and March, April 2025 marks the beginning of the new fiscal year, when the government reviews national minimum wage.
From April 1st, the National Living Wage will increase to £12.21 per hour. Rates for younger workers are also increasing. 18–20-year-olds will be entitled to £10 per hour and those over compulsory school age but not yet eighteen will be entitled to £7.55 per hour.
Apprentices aged under nineteen – or nineteen or over and in the first year of their apprenticeship – will also be entitled to £7.55 per hour. Apprentices outside of those categories are entitled to their standard age-related rate.
Statutory payments
Whilst the exact date is yet to be confirmed, it is also expected that the government will make updates to statutory payments in April.
Statutory Sick Pay (SSP) will increase to £118.75 per week. Statutory Maternity Pay (SMP) and other family leave payments, including statutory paternity pay, will also increase to £187.18 per week.
On top of this, the Lower Earnings Limit will increase to £125 per week.
Neonatal care leave
April is also likely to see the introduction of neonatal care leave for parents of babies who are admitted to hospital before 28 days old and for at least one week.
Under the Neonatal Care (Leave and Pay) Act 2023, for every week the baby is in hospital, the parent will be able to take a week of neonatal leave to a maximum of 12 weeks. This will be paid at the statutory rate, in addition to maternity/paternity leave.
It will be a day-one right, meaning that employees not entitled to statutory paternity leave may well be entitled to neonatal leave. It will not be possible to refuse to allow an employee to take neonatal leave.
Paternity (bereavement) leave
While there is no confirmed date yet, 2025 is also expected to see the introduction of paternity (bereavement) leave.
Under the Paternity (Bereavement) Leave Act 2023, fathers and non-birthing partners would be entitled to paternity leave from day one of employment if the mother of the baby dies.
It is also the intention to extend paternity leave to the same length as maternity leave in these circumstances.
Employment Rights Bill
Last, but by no means least, the progression of the Employment Rights Bill will be a constant on the list of employment law priorities for organisations throughout 2025.
One of the biggest changes is the proposed day-one rights for unfair dismissal, subject to a statutory probation period. This is the single biggest change to employment legislation in many years, potentially opening the floodgates for tribunal claims.
Combined with the significant financial implications of employer NICs, it means that we are likely to see the job market tighten in the year ahead.
With so many changes to contend with – and costly consequences where employment law updates are not implemented correctly – preparation is key.
