Employment Law Changes in 2025: Quick Guide for Employers

• “Fire and rehire” is now covered by a statutory Code of Practice, with steeper penalties for non-compliance.
• The National Living Wage now applies to workers aged 21 and above, with new rates across all age groups.
• New statutory entitlements include Neonatal Care Leave and higher caps for redundancy and family-related pay.
• Employers must meet updated deadlines and requirements for gender pay gap reporting.
• Employer National Insurance Contributions (NICs) rise to 15% from April 2025.
• The Employment Rights Bill, still under review, could introduce further changes, including protections for zero-hours and agency workers.
• Employers must review policies, train HR teams and update internal systems to remain compliant.

Current reforms in employment law aim to improve worker protections.

Here is the timeline of key changes to prepare you and ensure that your organisation stays compliant.

From 20 January 2025, stricter rules have been introduced that directly affect how you regulate the controversial practice of “fire and rehire,” where employees are dismissed and re-engaged on less favourable terms.

If you’re considering contractual changes that impact 20 or more employees, you’re now legally required to carry out collective consultation. If you skip this step, you risk a protective award of up to 90 days’ pay per employee.

On top of that, a new statutory Code of Practice now applies to all fire-and-rehire processes. If you don’t follow it, employment tribunals can increase those protective awards by 25%, raising the total penalty to as much as 112.5 days’ pay per worker.

Tribunals will expect to see evidence that you’ve followed the Code. That means clear communication, genuine consultation and proof that dismissal was a last resort.

From 1 April 2025, you’ll need to apply updated wage rates across your workforce.

The National Living Wage will now cover workers aged 21 and over, down from the previous threshold of 23.

The updated hourly rates are:

• £12.21 for ages 21 and over (previously £11.44 for 23+).
• £10.00 for ages 18 to 20 (previously £8.60).
• £7.55 for ages 16 to 17 and apprentices (previously £6.40).

Make sure you’re using the new rates from this date.

You’ll need to update your leave policies to include the new Neonatal Care Leave and Pay entitlement.

From 6 April 2025, employees can take up to 12 weeks of paid leave if their newborn is admitted to neonatal care for at least seven consecutive days within the first 28 days of birth.

This new right starts from day one of employment. Make sure your HR team is briefed and systems are ready to manage and track this leave.

From 6 April 2025, the cap for redundancy pay goes up. If you’re handling redundancies for employees with two or more years of service, you’ll need to base their payment on weekly pay, age, and length of service as usual, but with a higher weekly cap.

The maximum weekly pay for redundancy calculations will rise to £719, up from £700.

Use the new cap for any redundancy on or after this date.

From 6 April 2025, you’ll need to apply updated statutory pay rates for staff on sick leave and family-related leave.

• Statutory Sick Pay rises to £118.75 per week (up from £116.75).
• Statutory Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement Pay increase to £187.18 per week (up from £184.03).

Organisations with 250 or more employees are legally required to report their gender pay gap data annually. This obligation hinges on a specific date each year, known as the ‘snapshot date’, which varies by employer type

• Public sector must report by 30 March 2025 (snapshot date: 31 March 2024)
• Private and voluntary sectors must report by 4 April 2025 (snapshot date: 5 April 2024)

(For example, a private company that employed 250 people on 5 April 2024 must base its gender pay gap calculations on payroll data from that date and report the findings by 4 April 2025.)

Reports must be published on the organisation’s website and uploaded to the GOV.UK gender pay gap reporting portal.

You can also add a short explanation of the pay gap and describe what actions you’re taking to reduce it. This part is optional but encouraged.

From 6 April 2025, your employer National Insurance Contributions (NICs) will rise from 13.8% to 15%. The earnings threshold for NICs will also drop from £9,100 to £5,000.

The Employment Rights Bill isn’t currently law, but it’s expected to have a significant impact once it’s progressed fully through Parliament.

It’s currently at the reporting stage, with several important proposals on the table that could take effect in late 2025 or early 2026.

Here’s what’s being considered:

• Zero-hours contracts: Employers may be required to offer guaranteed minimum hours. Workers can choose to stick with their current terms if preferred.
• Agency workers: May be included under restrictions that limit the use of zero-hours contracts.
• Pregnancy loss before 24 weeks: Parents may gain the right to two weeks of bereavement leave.

If passed, these measures will require changes to your contracts, leave policies and staffing models. Keep an eye on developments and prepare to update your HR documentation when the bill becomes law.

As employment law continues to evolve, HR professionals and business leaders must stay informed and ready to act. Whether it’s adapting to new statutory entitlements, updating internal procedures or managing complex workforce issues, the risks of falling behind are real.

We offer a wide range of online courses to support HR staff with training on key workplace responsibilities such as handling grievances, tackling misconduct and managing leave, pay and dismissal in line with the law.

The courses will help minimise the legal risks and strengthen your workplace compliance.