What changes will 2025 bring to employment law?
As we step into 2025, a wave of new employment law rulings is set to reshape the workplace. Employers and HR professionals must stay ahead of these changes to ensure compliance and maintain a positive work environment.
This blog will cover the key changes coming in 2025 and will consider what your business can do to prepare for them.
Fire and rehire code of practice
This refers to the practice of firing an employee, and then rehiring them on new contract terms.
If an employer is found to have unreasonably followed the new code of practice, protective awards can be increased by up to 25 per cent. This means employers might have to pay up to 112.5 days of uncapped pay for each affected employee.
This is Coming into effect on the 20 January.
The new rules do not ban the practice of firing and rehiring but encourage employers to engage in discussions with employees or their representatives to consider alternatives before deciding to dismiss and re-hire under new terms unilaterally.
The code will be engaged once the prospect of dismissal and re-engagement is raised. It is important to consider the number of employees it will affect, so you can consider whether the collective redundancy obligations apply when seeking to change the terms of a contract.
Payroll expenses increase
- Changes to the National Minimum Wage
The new rates are as follows:
- £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)
- Increase in employer national insurance contributions
Starting in April 2025, the National Insurance (NI) threshold on employee earnings will decrease from £9,100 to £5,000, and the NI rate will rise from 13.8 per cent to 15 per cent.
In addition to the direct increase in payroll expenses, the changes will introduce extra administrative tasks as companies adjust their budgets, payroll processes, and forecasting to align with the new requirements.
For smaller companies, and those with tight profit margins, these new rules may stretch resources thin as they need to more carefully balance staff acquisition with ongoing operations.
These changes will affect different businesses differently – those reliant on minimum-wage workers will be affected more compared to those who are not.
Therefore, it is key that employer’s forward plan. Reviewing staffing levels, working patterns and remuneration strategies are good practices to maintain financial stability.
Increases in paid leave
- Statutory sick pay increase
On the sixth of April, the rate will increase from £116.40 a week to £118.75 per week.
- Statutory family pay increase
Also coming into effect on the sixth of April, the weekly rates for statutory maternity, paternity, adoption, and shared parental pay will rise to £187.18, an increase from £184.03.
- Paid Neonatal care leave
The Government has not yet confirmed this change, but it is expected to come sometime in April.
Eligible parents of newborns who need specialist neonatal care for at least 7 days within 28 days of birth will be entitled to up to 12 weeks of statutory neonatal care leave as a “day one” right.
This leave must be taken within 68 weeks of the birth and is in addition to existing entitlements like maternity leave.
Parents with at least 26 weeks of continuous service and who earn above the lower earnings limit will also qualify for Statutory Neonatal Care Pay.
What employers should do to prepare for increases in paid leave
Employers should look to plan for how this will work in practice. Revise and update your family-friendly policies to incorporate provisions for neonatal care leave, ensuring they meet or exceed the minimum statutory entitlements.
Working closely with your HR team to implement changes and provide support to managers and employees, ensuring clear communication so the latest changes are understood.
Failure to prevent fraud
Affecting large employers who meet two or more of the following requirements:
- Turnover of over £36 million
- Total assets of over £18 million
- Over 250 employees
Coming into effect on the first of September, large employers who commit fraud will be liable for a new offence of failing to prevent fraud.
This is unless they can prove they had measures in place to prevent fraud by their employees or other associates.
What employers can do in light of the new fraud prevention measures
Guidance listed by the home office here outlines the types of fraud covered, and reasonable prevention procedures that employers can take to prevent fraud.
Employers must have the necessary procedures in place to prevent fraud, so it would be best practice to review fraud detection and prevention procedures in preparation for the new rulings coming into place.
Employers should revise employment contracts and policies to include provisions for fraud prevention, stating that failure to adhere to the employer’s requirements in this area will be treated as a disciplinary matter potentially leading to dismissal.
The importance of seeking legal guidance
This year will issue several key changes to employment rights and employer’s responsibilities.
Employers must stay up to date with the latest changes, reviewing and updating existing policies to ensure compliance.
Get in touch with one of our experts if you need more information on any of the latest changes, or need guidance on steps you can take to accommodate them.