Employment Law Update 2025

From 1 April 2025 the following rates applied:

• 21 and over: Current – £11.44, new – £12.21
• 18 to 20: Current – £8.60, new – £10.00
• Under 18: Current – £6.40, new – £7.55
• Apprentice: Current – £6.40, new – £7.55

Employers should update payroll systems and inform staff of these changes.

Effective 6 April 2025, significant adjustment to National insurance Contributions (NIC) will impact employers across the UK:

• Increased Employer NIC Rate: The rate for employer NICs will rise from 13.8% to 15%.
• Lowered Secondary Threshold: The threshold at which employers begin paying NICs will decrease from £9,100 to £5,00 per year.
• For smaller businesses, the employment allowance will be raised from £5,000 to £10,500.

Employers should assess the financial implications of these adjustments, as they may influence staffing budgets and overall operational costs.

Effective 6 April 2025, statutory pay rates for various family-related leaves and sick pay have been revised as follows:

• Statutory Maternity, Paternity, Adoption and shared Parental and Parental Bereavement pay has increased from £184.03 to £187.18 per week.
• Statutory sick pay (SSP): Increased from £116.75 per week to £118.75. The increase in rate may have a knock-on effect on employers who offer enhanced or company sick pay schemes.
• Lower Earnings Limit (LEL): Increased from £123 to £125 per week. The lower earnings limit for maternity allowance will remain at £30 a week.

The Neonatal Care (Leave and Pay) Act 2023 introduces up to 12 weeks of neonatal care leave for parents of babies admitted to hospital up to 28 days old, with a continuous stay of seven full days or longer. This entitlement is in addition to existing maternity and paternity leave rights and is available from the first day of employment for parents of children born on or after 6 April 2025.

It is important to note that Statutory Neonatal Care Pay is not a day one right and parents of children born on or after 6 April 2025 must have 26 week’s service and meet a minimum earnings threshold to be eligible. The statutory rate is initially £187.18 from 6 April 2025 or 90% earnings if lower.

The Paternity Leave (Bereavement) Act 2024 received Royal Assent on 24 May 2024 and will provide the following:

• Day one entitlement
• Extended leave duration- up to 52 weeks leave from the date that the mother/primary adopter of the child died
• Flexibility in leave utilisation in addition to paternity leave
• Keeping in touch days
• Enhanced redundancy protection

The Act was originally expected to come into force in April 2025 but no date has been scheduled.

Effective from 6 April 2025, the statutory cap on a weeks pay will increase from £700 to £719.

The maximum in terms of basic award and statutory redundancy pay is now £21,570.

From 20 January 2025, Tribunals can award a 25% uplift in protective awards for failing to comply with the statutory code on dismissal and re-engagement during collective redundancies.

In respect of claims presented to the employment tribunal on or after 6 April 2025, the awards for injury to feelings in discrimination and detriment cases (Vento bands) are as follows:

• A lower band of £1,200 to £12,100 (less serious cases)
• A middle band of £12,100 to £36,400 (cases that do not merit an award in the upper band)
• An upper band of £36,400 to £60,700 (the most serious cases) with the most exceptional cases capable of exceeding £60,700.

The Economic Crime and Corporate Transparency Act 2023 introduces a new corporate criminal offence of “failure to prevent fraud”, set to take effect on 1 September 2025.

Under the legislation, large employers can be held liable if an associated person (such as an employee, agent or subsidiary) comments a specified fraud offence intended to benefit the organisation or its clients.

A large employer meets two or more of the following criteria:

• Turnover exceeding £36 million.
• Total assets exceeding £18 million.
• More than 250 employees

To establish a defence, companies must demonstrate that they had “reasonable prevention procedures” in place to deter such fraudulent activities.

The government has published guidance outlining these procedures, emphasising the importance of a tailored, risk-based approach to fraud prevention. Organisations are advised to review and enhance their compliance programs ahead of the implementation date to ensure adherence to the new requirements.

The Institute for Apprenticeships and Technical Education (Transfer of Functions) Bill has reached committee stage following its introductions at the House of Lord on 9 October 2024.

The Bill aims to formally establish Skills England, a new executive agency within he Depart for Education (DfE), by transferring functions from the existing Institute for Apprenticeships and Technical Education (IfATE).

The goals of Skills England and this segment of the Government’s proposed employment law reforms are to:

• Foster a shared understanding of both national and local skills demands through collaboration with industry, unions, and government organisations.
• Evaluate existing and future skills needs to guide the Department for Education’s policy decisions.
• Clarify how the growth and skills levy can be allocated for training, ensuring it aligns with the economic skills demands and delivers value for money.
• Ensure that national and regional skills systems are effectively addressing skills gaps in a coordinated way.

On 13 November 2024, the Government announced it will introducing a new Pension Schemes Bill in 2025. It is expected to be introduced later this year and is set to implement significant reforms.

The Employment Rights Bill was introduced to Parliament on 10 October 2024 and has completed its passage through the House of Commons. It is currently under consideration in the House of Lords.

The Bill encompasses a range of employment law reforms, including provisions related to unfair dismissal, flexible working, statutory sick pay, family leave and protections against workplace harassment.

It is anticipated that the Bill will receive Royal Assent later this year. Employers should monitor the Bill’s progress and prepare for the forthcoming changes to ensure compliance once the legislation is enacted.