Over the next 12 to 18 months, major alterations will affect your budgets while giving your employees more job rights. The Employment Rights Bill is the most major alteration, and it is anticipated to pass parliament in 2025. The majority of the suggested modifications won’t take effect until 2026. Even though it might seem far off, we advise you to prepare ahead of time and participate in pertinent consultations that could negatively affect your industry in the hopes that the government would soften some of its suggestions. 

Pay and Wages April 2025 Stay Ahead HR

The National Minimum Wage will be increased from April 2025

The national Living Wage (for workers aged 21 and above) will rise by 6.7%, from £11.44 to £12.21 per hour from the start of April 2025. This increase translates to an additional £1,400 per year for full-time workers. Additionally, the National Minimum Wage will see a record-breaking 16.3% increase for 18- to 20-year-olds, from £8.60 to £10.00 per hour. The apprenticeship rate and the rate for workers under 18 will also rise, from £6.40 to £7.55 per hour, marking an 18% increase.

This step is part of the government’s commitment to align the National Minimum and National Living Wage over time, ultimately creating a single adult rate.

National Insurance Contributions – employment law

By April 2025, the National Insurance (NI) rate that employers are required to pay will increase by 1.2%, from 13.8% to 15%. Additionally, the annual threshold at which employers are required to begin paying national insurance on a worker’s earnings will be decreased from 9,100 to £5,000. The employment allowance will be increased from £5,000 to £10,500 to assist smaller enterprises. This change will result in over 800,000 employers not paying any NI next year, while over one million will pay the same or less than they did previously. 

Statutory Payments – employment law changes

Statutory payments will experience some modest increases commencing in April 2025: 

  • The current weekly rate of Statutory Sick Pay is £116.75. However, it will be raised to £118.75.
  • The current weekly rate of Statutory Maternity Pay, maternity allowance, Statutory Paternity Pay, Statutory Shared Parental Leave Pay, and Parental Bereavement Pay is £184.03. The new rate will be £187.18.
  • Compared to the current rate, the lower earnings limit (the minimum amount an employee must earn each week to qualify for these payments, excluding maternity allowance) will be £125, a £2 increase. The maternity allowance’s lesser earnings limit will remain at £30 per week. 

Holiday and Holiday Pay

Workers with irregular working hours (such as those employed on zero-hour contracts) and part-year workers, with leave years on or after 1 April 2024, are subject to new regulations as a result of the amendment of the Working Time Regulations by The Employment Rights (Amendment, Revocation and Transitional Provisions) Regulations 2023. This means that for certain businesses, these regulations will only now be implemented, as many of them operate on a January to December leave year. 

The new regulations stipulate that part-year workers and those who work irregular hours will accumulate vacation time at a rate of 12.07% of the hours they work, as opposed to being automatically entitled to 5.6 weeks of vacation each year. Employers will also be able to lawfully roll up holiday pay for this group of workers by paying an additional 12.07% on top of their hourly pay, provided that they detail this separately on their payslips. 

Collective Consultation

Protective Awards

Employers are required to conduct collective consultation in specific situations. A protective award of up to 90 days’ pay may be ordered by the tribunal for each affected employee if an organisation fails to fulfil its collective consultation obligations, where applicable. 

Tribunals will have the authority to increase this protective award by up to 25% starting January 20, 2025, if the employer has unreasonably disregarded a pertinent Code of Practice, including the Code of Practice on Dismissal and Re-engagement. Conversely, compensation may be diminished by up to 25% if the employee has failed to adhere to the Code. 

Initiate a collective consultation

At present, employers who intend to implement 20 or more redundancies at a single location within 90 days are required to engage in a collective consultation with a recognised union or employee representatives before terminating any employees. Employees may request a protective award of up to 90 days’ pay if they fail to comply. Employers will be required to determine whether they require collective consultation by counting any proposed redundancies across all of their sites or premises, as the Bill eliminates the phrase “at one establishment.” Upon the Bill’s enactment, this modification will be implemented. 

Family Rights

Neonatal Care Leave

In addition to any other leave they are entitled to, parents of infants admitted to neonatal care will be permitted to take up to 12 weeks of paid leave under the Neonatal Care (Leave and Pay) Act 2023. This privilege will be implemented in April 2025. It is anticipated that additional regulations will be implemented to provide additional clarification.

Paternity Leave and Bereavement

The Paternity Leave (Bereavement) Act 2024 will eliminate the requirement for fathers and partners to have worked for a minimum of 26 weeks before being eligible to take paternity leave in cases where the mother, or an individual with whom a child is placed or expected to be placed for adoption, has passed away within the first year of the child’s birth or adoption.  The government has not specified the anticipated implementation date of this new privilege, and additional regulations will be required. 

The Employment Rights Bill

A significant amount of proposed changes to employment law, such as the right to claim unfair dismissal from the first day of employment and the reintroduction of employers’ liability for third-party harassment, were included in the Employment Rights Bill, which was introduced to Parliament on 10 October 2024. The majority will not be implemented until 2026. However, there are a few exceptions, such as the repeal of legislation regarding industrial action and trade unions and the modification of the trigger for collective consultation. 

Several clauses in the Bill have already been the subject of government consultation. Additional information will be forthcoming. We strongly advise that you identify the proposals that are likely to have a significant detrimental impact on your organisation and clearly articulate your concerns when the consultation is delivered. The number of responses it receives from interest parties is a significant factor in its decision-making process. We will notify you of the announcement of each new consultation. 

Other Employment Changes

We anticipate that a new Equality (Race and Disability) Bill will be introduced to parliament at some stage, in addition to the Employment Rights Bill. This is expected to encompass measures such as the extension of pay gap reporting to ethnicity and disability for employers with a workforce of more than 250 employees. The government has also stated that it will implement additional reforms through alternative routes. For instance, it is anticipated that a new statutory Code of Practice will establish a new right to disconnect from work. 

Conclusion

Effect from April 2025 is set to bring about significant changes in employment law that will come into force, and employers need to start planning now. From pay increases to expanded family rights, these changes will have far-reaching implications for budgets, operations, and HR practices. Staying informed and involved in consultations can help ensure a smoother transition and allow you to provide feedback on how these changes could impact your business. Keep an eye on upcoming consultations, and be sure to adjust your policies and practices accordingly to comply with these new regulations.

If you are in HR and need to understand the employment law updates please don’t hesitate to contact us. If you have any questions about how these changes will affect your business, feel free to get in touch for further advice and guidance. Contact us today at 0141 433 2626 to make a free initial consultation.