As we approach April 2025, businesses across the UK need to prepare for another round of significant employment law changes. April traditionally heralds important legislative updates that impact employers and employees alike, and this year is no exception.
At Tann Law Solicitors, our employment law specialists have been closely monitoring these developments to ensure our clients can navigate these changes effectively.
While some of the more extensive reforms from the Employment Rights Bill won’t come into effect until Autumn 2026, several important changes are set to be implemented from April 2025 that require your immediate attention.
This article outlines the key employment legislation changes taking effect in April 2025 and provides practical guidance on how businesses should prepare for these updates.
National Minimum Wage and National Living Wage Increases
One expected yet still significant change coming into effect on 1st April 2025 is the increase in National Minimum Wage (NMW) and National Living Wage (NLW) rates. These increases represent substantial rises that will affect businesses across all sectors.
New Rates from 1st April 2025
The new hourly rates will be:
- National Living Wage (21 years and over): ยฃ12.21 (up from ยฃ11.44), a 6.7% increase.
- 18-20 years old: ยฃ10.00 (up from ยฃ8.60), a 16.3% increase.
- Under 18 years old: ยฃ7.55 (up from ยฃ6.40), an 18% increase.
- Apprentice rate: ยฃ7.55 (up from ยฃ6.40), an 18% increase.
The increase for 18-20 year olds is particularly notable, being the largest rise on record for this age group.
This significant jump is believed to be in preparation for the anticipated future change in the National Living Wage age threshold from 21+ to 18+ years.
Implications for Employers
These increases will have several implications for businesses:
- Payroll costs: Businesses employing staff on minimum wage will need to adjust their budgets to accommodate these higher rates.
- Wage differentials: Employers may need to review and potentially adjust pay scales to maintain appropriate differentials between roles of different seniorities.
- Price adjustments: Some businesses might need to consider adjusting their pricing strategies to accommodate increased wage costs.
- Working hours management: More careful management of working hours and shift patterns may be necessary to control costs.
Compliance Requirements
Employers must implement these new rates promptly to avoid potential penalties.
We recommend reviewing your payroll systems to ensure all employees receive the correct rates from the implementation date.
Changes to Employer National Insurance Contributions
The Autumn Budget of 2024 announced significant changes to employer National Insurance Contributions (NICs) that will take effect from 6th April 2025.
New Thresholds and Rates
Two key changes are being implemented:
- The employer NICs rate will increase from 13.8% to 15%.
- The secondary threshold (the level at which employers start paying NICs) will be reduced from ยฃ9,100 to ยฃ5,000 of an employee’s annual salary.
These dual changes represent a substantial increase in the employer’s NICs liability, as employers will now:
- Pay a higher percentage contribution.
- Start paying NICs on an additional ยฃ4,100 of each employee’s salary.
- Potentially have more employees falling within the scope of NICs, particularly part-time workers and those on lower salaries.
Strategies for Managing Increased Costs
To mitigate the impact of these increased contributions, businesses may want to consider:
- Reviewing overall remuneration structures
- Exploring outsourcing options for certain functions
- Reconsidering recruitment plans or implementing hiring freezes
- Improving operational efficiency to offset increased costs
Planning is essential to manage these additional costs effectively. We recommend conducting a detailed assessment of the financial impact on your specific workforce and developing a strategic response for your business.
Updates to Family-Friendly Policies
April 2025 will bring enhancements to family-friendly policies, with the introduction of new leave entitlements and increases to statutory payment rates.
Introduction of Neonatal Care Leave and Pay
The Neonatal Care (Leave & Pay) Act 2023 comes into effect on 6th April 2025, introducing an important new entitlement for parents of babies requiring neonatal care:
- Eligible employees will be entitled to up to 12 weeks of paid leave if their baby is admitted to hospital before they are 28 days old and has a continuous stay of seven days or more.
- This is a day-one right, available to employees from their first day of employment.
- The amount of leave depends on the length of the baby’s hospital stay (capped at 12 weeks).
- Parents can take one week of leave for each full week the baby receives neonatal care.
- Leave must be taken within 68 weeks of the baby’s birth.
- To qualify for statutory pay, employees must have at least 26 weeks of continuous service and earn an average of ยฃ123 per week during the relevant period.
This new entitlement will run alongside existing family leave rights, providing additional support during what is often an extremely difficult time for parents.
Increases to Statutory Payment Rates
From 6th April 2025, statutory payment rates will increase as follows:
- Statutory Sick Pay (SSP): Increasing to ยฃ118.75 per week (from ยฃ116.75).
- Statutory Maternity Pay (SMP), Paternity Pay, Adoption Pay, Shared Parental Pay, and Parental Bereavement Pay: Increasing to ยฃ187.18 per week (from ยฃ184.03).
Remember that for the first six weeks, SMP is paid at 90% of the employee’s average weekly earnings, with the remaining 33 weeks paid at the lower of that rate or the statutory weekly amount.
Employer Obligations
In preparation for these changes, employers should:
- Develop or update policies to reflect the new Neonatal Care Leave and Pay entitlement.
- Create appropriate notification procedures and forms.
- Train managers and HR personnel on the new entitlements.
- Update payroll systems to accommodate the new statutory payment rates.
- Review any company schemes to ensure they align with the new statutory provisions.
These family-friendly policy enhancements represent an important step forward in supporting employees with various family responsibilities, particularly during challenging times.
Employment Rights and Protections
While the most substantial changes to employment rights proposed in the Employment Rights Bill won’t be fully implemented until 2026, several important developments will be taking place this April.
Consultations on Enhanced Worker Protections
The government is expected to launch consultations in 2025 on several key aspects of the Employment Rights Bill, including:
- Removal of the two-year qualifying period for unfair dismissal claims: This would make unfair dismissal protection a day-one right, significantly increasing the importance of proper dismissal procedures.
- Changes to zero-hour contracts: Introducing rights to guaranteed hours that reflect regularly worked patterns.
- Enhanced flexible working rights: Requiring employers to agree to flexible working requests unless they can demonstrate it would be unreasonable.
- Enhanced protections during pregnancy and after family leave: Making it unlawful to dismiss an employee during pregnancy or within six months of their return from statutory family leave.
While these consultations may not lead to immediate changes, they indicate the direction that employment law developments may be taking and give employers time to prepare for future reforms.
Implications for Employers
These potential changes would represent a significant shift in employment protections. We recommend that employers:
- Begin reviewing existing contracts and employment policies in anticipation of these changes.
- Consider how the removal of the unfair dismissal qualifying period might affect your approach to probationary periods and performance management.
- Assess how the changes to zero-hour contracts could impact your workforce planning, particularly if you rely heavily on flexible workers.
- Develop strategies for handling flexible working requests more systematically.
Early preparation will be key to managing these transitions effectively when they are eventually implemented.
Reporting Requirements and Immigration Compliance
International Care Worker Recruitment Changes
The recent announcement regarding care worker recruitment (requiring employers to prioritise international care workers already in England before recruiting from overseas from 9th April 2025) signals a continued focus on immigration compliance.
Gender Pay Gap Reporting
Gender pay gap reporting obligations continue, with companies employing 250 or more employees required to publish their gender pay gap data. The reporting deadlines remain:
- 30th March 2025 for public sector employers
- 4th April 2025 for private sector employers
The government has also indicated plans for a new Equality (Race and Disability) Bill that may expand pay gap reporting to include race and disability pay gaps. While this is unlikely to be implemented by April 2025, employers should monitor developments in this area.
How Tann Law Can Help
At Tann Law Solicitors, our employment law specialists can assist with navigating these changes through:
- Reviewing and updating employment policies and contracts.
- Providing training to managers and HR teams on the new requirements.
- Advising on strategic approaches to managing increased costs.
- Assisting with complex cases, such as neonatal leave entitlements.
- Providing ongoing support to ensure continued compliance as the employment law landscape evolves.
Our proactive approach focuses on helping businesses implement these changes smoothly while protecting their interests and maintaining positive employee relations.
Conclusion
The employment law changes coming into effect in April 2025 represent significant developments that will impact businesses of all sizes across the UK.
From increased wage and National Insurance costs to enhanced family-friendly rights and the prospect of further reforms in the pipeline, employers face a challenging landscape of change.
Proactive preparation is essential for managing these transitions effectively. By understanding the changes, assessing their impact, and implementing appropriate policies and procedures, businesses can minimise disruption and continue to grow amidst the changes.
At Tann Law Solicitors, we remain committed to supporting our clients through these changes with practical, tailored advice that addresses their specific needs and circumstances. Our employment law team stays at the forefront of legislative developments to ensure you receive the most up-to-date guidance.
For personalised advice on how these changes will affect your business and support with implementation, contact our employment law specialists today.
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