Recent Employment Law Changes in the UK (2025)

The UK has introduced several major employment law changes in 2025, impacting businesses and workers across various industries. These reforms aim to enhance workers' rights, improve workplace conditions, and ensure fair treatment. Below is a detailed breakdown of the key updates, along with their implementation dates.

1. Employment Rights Bill – A Landmark Reform

The Employment Rights Bill, set to become law in Autumn 2026, introduces sweeping changes to employment protections. Some of the most notable reforms include:

Day-One Rights for Employees

• Effective from 2026, employees will have full employment rights from their first day, including:
  • Protection from unfair dismissal
  • Statutory sick pay eligibility
  • Maternity and paternity leave entitlements
• Previously, employees had to work for two years before gaining protection from unfair dismissal. This change significantly strengthens job security.

Zero-Hour Contracts – Stricter Regulations

• Employers must provide predictable working hours for zero-hour contract workers.
• Workers will have the right to request a fixed schedule after six months of employment.
• Businesses failing to comply may face legal penalties.

Expanded Statutory Leave Entitlements

• Statutory leave entitlements have been increased, ensuring workers receive more paid time off.
• The government aims to align UK leave policies with European standards.

2. National Minimum & Living Wage Increase

From April 1, 2025, the National Minimum Wage and National Living Wage have increased:

• Workers aged 21 and over now earn £12.21 per hour, up from £11.44.
• Employers failing to comply may face fines of up to 200% of the underpayment, with a maximum penalty of £20,000 per affected worker.

Impact on Businesses

• Employers must update payroll systems to reflect the new rates.
• Non-compliance could result in legal action and reputational damage.

3. Statutory Sick Pay (SSP) Adjustments

Effective from April 6, 2025:

• SSP has increased to £118.75 per week, with the lower earnings threshold rising to £125.00 per week.
• Employers must ensure correct SSP payments, as failure to comply can result in legal penalties and tribunal claims.

Employer Responsibilities

• Businesses must update HR policies to reflect the new SSP rates.
• Employees must be properly informed of their entitlements.

4. Workplace Sexual Harassment Prevention

Effective from March 13, 2025:

• Employers are now legally required to take reasonable steps to prevent sexual harassment in the workplace.
• Many businesses have introduced mandatory training programs, though 60% of companies have yet to implement them.

Key Employer Actions

• Implement anti-harassment training for all employees.
• Establish clear reporting procedures for workplace harassment cases.

5. National Insurance (NI) Rate Increase

Effective from April 6, 2025:

• The employer NI rate has risen by 1.2% to 15%, increasing payroll costs.
• The secondary threshold has been lowered from £9,100 to £5,000, meaning employers must pay NI on a greater portion of employee wages.

Business Considerations

• Employers must adjust budgets to accommodate higher NI contributions.
• Payroll teams should ensure compliance with the new rates.

6. Flexible Working & Whistleblowing Protections

Effective from April 6, 2025:

• Employees can now request flexible working from day one, rather than waiting 26 weeks.
• Whistleblowing protections have been strengthened, encouraging transparency and accountability in workplaces.

Employer Responsibilities

• Businesses must review flexible working policies to ensure compliance.
• Whistleblowing procedures should be clearly outlined in employee handbooks.

What These Changes Mean for Businesses

Employers must adapt to these new laws by:
✅ Updating contracts and employee handbooks to reflect the latest regulations.
✅ Ensuring payroll systems comply with wage and NI adjustments.
✅ Implementing workplace training to meet harassment prevention requirements.
✅ Reviewing sick pay policies to align with new SSP rates.
✅ Strengthening whistleblowing protections to encourage transparency.

These reforms mark a significant shift in UK employment law, aiming to create a fairer and more secure working environment for employees while ensuring businesses remain compliant.