As we move through 2025, employers across the UK are facing one of the most significant periods of employment law reform in recent years. Several key changes have already taken effect, while more are expected to come into force before the year is out – bringing with them serious implications for payroll, leave entitlements, HR practices, and employer liabilities.
From increases in statutory pay to expanded employee rights and forthcoming legislation on flexible working, now is the time for employers to ensure their contracts, handbooks, and workplace policies are fully compliant and fit for purpose.
At Hutchinson Thomas, our employment law specialists are here to help you stay ahead. In this article, Partner Simon Thomas guides you through the latest developments and what they mean for your business.
Key changes already in force
National minimum and living wage increases
As of April 1, 2025, the National Living Wage rose to £12.21 per hour for workers aged 21 and over. Other age-related National Minimum Wage rates also increased, including £8.60 for 18–20-year-olds and £6.40 for 16–17-year-olds and apprentices. Employers must ensure these new rates are reflected in their payroll systems and employee contracts.
Neonatal care leave and pay
From April 6, 2025, employees are entitled to up to 12 weeks of paid leave if their baby requires neonatal care in the first 28 days of life. This leave is in addition to maternity or paternity leave and is available from day one of employment. Employers should introduce a specific Neonatal Care Leave policy and train managers to handle sensitive requests with care.
Increased redundancy and tribunal compensation caps
The weekly pay cap for statutory redundancy payments has increased to £719, with a new maximum redundancy payment of £21,570. In unfair dismissal claims, the compensatory award cap now stands at £115,000 (or one year’s gross salary, whichever is lower), and Vento bands for injury to feelings have also risen. Employers must ensure HR teams are using these new figures in all relevant calculations.
Tribunal risk and legal exposure
With these increases, employers face greater financial exposure in the event of claims. It is therefore vital to review disciplinary, grievance, and dismissal procedures to ensure they are robust and legally sound.
What’s coming: The Employment Rights Bill 2025
The proposed Employment Rights Bill 2025 introduces several further changes that will reshape employer responsibilities:
Day-one rights
Employees will soon be entitled to claim unfair dismissal from their first day of work, a significant shift from the previous two-year qualifying period. Employers may still apply a defined probationary period, but this will require careful drafting and policy updates.
Expanded family-friendly rights
Statutory sick pay will be available from the first day of absence, and new rights to paternity, parental, and bereavement leave will also be accessible from day one. These changes are part of a broader trend towards improving work-life balance and employee wellbeing.
Reforming zero-hours contracts
New rules will allow workers on consistent shift patterns to request a contract that better reflects their hours. Employers may also need to give reasonable notice for shift cancellations and compensate workers for last-minute changes – a major change for industries relying on casual labour.
Fire and rehire restrictions
New legislation aims to limit the use of fire-and-rehire tactics unless there is a genuine financial necessity. Employers considering contractual changes must tread carefully to avoid breaching these stricter requirements.
Flexible working by default
Employees are set to gain the right to request flexible working from their first day of employment. Employers will need solid, documented reasons for refusing requests – and in many cases, may need to adopt flexible arrangements as standard practice.
Anti-harassment duties and collective consultation
Employers will face a strengthened legal duty to prevent workplace harassment, including from customers or third parties. In cases of collective redundancies across different locations, a business-wide headcount may now trigger consultation requirements.
Is your business compliant?
These changes are not only complex but often require updates to multiple policies, contracts, and internal processes. Failing to comply could result in costly disputes, reputational harm, or even tribunal claims.
At Hutchinson Thomas, our employment law department can carry out a full audit of your employment documentation, advise on necessary updates, and help you prepare for what’s ahead.
We work with employers across all their employment law requirements. If you would like to discuss any aspect of your legal needs with an expert employment solicitor, call us on 01792 439 000, or fill in our contact form.