Spring 2025 employment law update

30 May 2025

Employment law has been back in the news, with the Employment Rights Bill working its way through Parliament – although this is still subject to amendment, and most changes are not expected to come into force until 2026. Some notable recent additions to the Bill are outlined below.

The usual updates to statutory pay rates took effect from April 2025. These include a sizeable increase in the national minimum wage rate for 18–20-year-olds, as the Government moves towards a single rate for workers aged 18 and over. A more significant change for many employers was the increase to National Insurance contributions.

A new right to neonatal care leave and pay has also been introduced, which is intended to extend parents’ family leave to compensate them for instances in which their baby has spent at least a week in neonatal care.

Increases in statutory pay rates

The usual annual increases in statutory rates of pay took effect in April:

National minimum wage

From 1 April 2025, the following increases took effect:

  • apprentices – increased from £6.40 to £7.55 per hour;

  • workers aged 16 to 17 – increased from £6.40 to £7.55 per hour;

  • workers aged 18 to 20 – increased from £8.60 to £10.00 per hour; and

  • national living wage (workers aged 21 and over) – increased from £11.44 to £12.21 per hour.

Statutory sick pay

From 6 April 2025, this increased from £116.75 to £118.75 per week.

Family-related statutory pay

From 7 April 2025, the rates of statutory maternity pay, statutory paternity pay, statutory adoption pay, statutory shared parental pay and statutory parental bereavement pay increased from £184.03 to £187.18 per week. The earnings threshold to be eligible increased from £123 to £125 per week.

Maternity allowance

From 11 April 2025, this increased from £184.03 to £187.18 per week. The earnings threshold to be eligible remains at £30 per week.

EMPLOYER’S National Insurance CONTRIBUTIONS

As announced in the 2024 Autumn Budget, from 6 April 2025, the rate of employer national insurance contributions (NICs) increased from 13.8% to 15%. The threshold at which employers are liable to pay NICs for each employee is reduced from £9,100 to £5,000 per year. This threshold is set until 5 April 2028, after which it will increase with the Consumer Price Index.

The employment allowance is also increased from 6 April 2025 from £5,000 to £10,500, meaning eligible employers (mostly small employers) can reduce their total NIC payments for the tax year 2025/26. Employers whose NICs liabilities in the previous tax year were more than £100,000 will now be able to claim the employment allowance.

Neonatal care leave and pay

A new right will allow parents (including adopting parents and intending parents in the case of surrogacy) time off work if their baby receives neonatal care. This is in addition to their other family leave entitlements, and will apply from the first day of employment to the parents of babies who:

  • are born on or after 6 April 2025; and

  • receive neonatal care for at least seven days following an admission during their first 28 days of life, including palliative care.

Parents may take one week of statutory neonatal care leave in respect of each week (or part of a week) that the baby is in neonatal care, up to at maximum of 12 weeks. The leave must be taken within 68 weeks of the baby’s birth. If the employee has worked for the employer for 26 weeks and they are paid more than the lower earnings limit (£125 per week for 2025/26) they must receive statutory neonatal care pay (£187.18 per week or 90% of their weekly pay, whichever is lower).

If the baby dies after the parents have become entitled to this form of leave, the parents do not lose their leave entitlement.

RECAPPING changes FROM 2024

Remember to ensure that you have taken appropriate steps in regard to other changes introduced in recent months:

Tipping – since 1 October 2024, employers are required to give all tips, service charges and gratuities to staff without deduction and to ensure that these are fairly shared between staff in accordance with the Statutory Code of Practice on fair and transparent distribution of tips.

Sexual harassment – since 26 October 2024, employers are under a duty to take reasonable steps to prevent their employees from being sexually harassed. Tribunals may increase an employee’s discrimination compensation by up to 25% if it is found that the employer failed in its duty. Until the relevant provisions in the Employment Rights Bill 2024 are brought into force (probably sometime in 2026), this duty does not extend to preventing acts of sexual harassment by customers or other third parties.

Fire and rehire compensation – in July 2024, new regulations increased the compensation an employee can be awarded if their employer fails to follow the Statutory Code of Practice on dismissal and re-engagement when dismissing and re-engaging them to bring about a change to their contract of employment. A tribunal can increase or reduce the award by 25% for any unreasonable failure to follow the Code, which sets out steps employers should follow, such as information sharing and meaningful consultation before moving to dismissal (which should be a last resort). It should be noted that a provision in the Employment Rights Bill 2024 (probably coming into force sometime in 2026) proposes to make it automatically unfair to dismiss an employee for refusing to agree to a contract variation.

From 20 January 2025, if an employer fails to collectively consult when changing terms and conditions through the dismissal and re-engagement process (this duty can arise where 20 or more employees are affected), and the employer unreasonably failed to comply with the Code, the Tribunal can increase the award for failing to consult by up to 25%. The award (before any increase) can be up to 90 days’ pay per employee (likely increasing to up to 180 days’ pay per employee when the Employment Rights Bill 2024 comes into force).

Update on Employment Rights Bill

Some changes relating to trade unions, including those relating to ballots, protection against blacklisting and unions in the public sector, are currently expected to come into force later in 2025. Otherwise, the provisions of the Employment Rights Bill are not expected to come into force until 2026 at the earliest. Recent amendments to the bill include the following significant changes:

  • Agency worker rights – the new rights to protect workers on zero-hours and low-hours contracts, such as the rights to guaranteed hours, to reasonable notice of shifts, and to compensation for shifts curtailed or cancelled at short notice, will be extended to agency workers.

  • Time limits to bring Employment Tribunal claims – currently, individuals have only three months to bring most claims. This will be increased to six months.

  • Tribunal claims brought by Government – the Secretary of State will be able to bring an Employment Tribunal claim on behalf of a worker where the individual has a right to do so but does not.

How we can help

Many of the recent and forthcoming changes to employment law will have the effect of increasing potential liability for employers. We can help you with policies to embed consistent good practice and give you practical advice to minimise risk across your business.

For further information, please contact the team at Synchrony Law.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Chris Tutton