Employment Law changes 2025 - what’s really going on?

Ever since the change in government, there has been a huge amount of noise in the media about massive changes being made in employment law.

Running your business is stressful enough at the best of times. Having additional distractions like this to deal with can be…... distracting. 

Barely a day goes by when we don’t receive some sort of communication about the Employment Rights Bill 2024, most of alarmist, some of it balanced, but what about now? 

In simple terms 2025 sees very few significant changes in employment legislation. The biggest one is the change to the National Minimum wage rate from this April. The most significant change sees the rate for 18-20 year olds increase by 16.3% to £10 per hour. This is part of the plan to standardise all adult wage rates to the National Living Wage. 

On top of the changes made to National Insurance contributions, this change is the one which will impact most businesses. 

Almost all of us are experiencing challenging economic conditions, and we are aware that many businesses are struggling and that this will seem like a tough one to take. However, if we all accept that people are THE most significant investment in almost every business and if we accept that we are living and working in one of the world’s richest countries, it should not be too much of a stretch to want to make sure that our lowest paid employees are at least paid a reasonable amount.

Over many decades the normal pyramid type of pay structure that most all of us live under has created an ever worsening wage disparity. To illustrate this, if your company gives an across the board pay increase of 5% - someone earning £50,000 gets an increase of £2500 whereas someone earning £25,000 gets an increase of £1250. If you continue that approach indefinitely it doesn’t take long before the gap between the highest and lowest earners becomes a chasm. 

To help address this challenge we know of many businesses who have taken different approaches. For example, instead of offering simple % pay rises, some businesses are calculating how much money they can allocate to pay rises and they then divide that total by the number of employees that they have. By doing this everybody receives the same monetary rise, but proportionally the lower paid are receiving a higher percentage increase. This is not only sensible planning, but it helps to narrow that wage disparity and provides more help to those who need it most.

Before you fly into a rage, and we know that some of you may think that this is politically motivated, it’s not. It’s nothing to with politics, just pure common sense. If your lowest paid workers leave to get a better paid job, how much does that cost your business and what damage does it cause? (BTW - it’s a bigger number than you think.) 

We all have bills to pay and the cost of living has risen enormously, but it’s the lower paid who are generally hit hardest and who are more negatively impacted than their higher paid colleagues. 

People leaving your employment, having to take second or even third jobs or relying on food banks is not good for YOUR business or YOUR productivity. Trying different approaches to help those that need it most is good for your business.

The other potential change this year sees the introduction of Neonatal Leave and Pay. These changes provide parents with 12 weeks leave and pay should their baby require neonatal care. At the time of writing this is scheduled to be introduced from April this year, however we are not able to confirm this yet and the instruments to support its introduction do not yet exist. 

So, despite all of the noise and endless postulating, your business has very little change ahead when it comes to employment legislation in 2025, leaving you to focus on other things. 

The Employment Rights Bill 2024 will come into effect at some time, but it has a long parliamentary process to go through and the Bill will see many changes before it becomes a reality. 

Having a long time to prepare for the changes ahead also means that you can be ready and instead of getting too upset about what is happening you can look at how your business can make the most of the changes to steal a march on your rivals. 

We live in a world where we are bombarded with information and it can be very confusing. 

Getting inspired and practical help with all of your people challenges is what FresHR is all about. 

We’re not interested in creating panic and making your life harder than it already is, we’re about helping with the real and practical situations that you face and that will impact you and your people. 

We help take the stress out of managing your most important asset – your people. Get FresHR now.