As we move further into 2025, several key employment law changes have taken effect already, impacting pay structures, leave entitlements, and tribunal limits. Staying informed is essential for legal compliance and maintaining positive workplace relations.
Below is a summary of the most significant updates which took effect from April 2025, and an overview of some other key changes coming down the track:
Changes to the National Minimum Wage
The National Minimum Wage (NMW) and National Living Wage (NLW) rates were increased, reflecting the government’s commitment to supporting lower-paid workers amid inflation and cost-of-living pressures.
The new rates, as of 1 April 2025, are as follows:
- National Living Wage (21+): Increased to £11.44 per hour
- 18–20-year-olds: Increased to £8.60 per hour
- 16–17-year-olds & apprentices: Increased to £6.40 per hour
There are several actions that employers should have already taken to ensure compliance with these new wage rates, these include a review of their payroll and staffing budgets to accommodate the changes, updating employment contracts and internal systems, as necessary, to ensure these changes are applied and clearly communicating these changes to all affected employees. Generally, for existing employees whose pay would change, a contract variation letter would be issued to formally document this contractual change, rather than issuing a brand-new contract.
New Entitlement for Neonatal Care Leave and Pay
The government introduced Neonatal Care Leave and Pay for parents whose babies require specialist neonatal hospital care.
The key features of this entitlement include:
- Available from day one of employment.
- Up to 12 weeks of leave, in addition to existing maternity/paternity entitlements. This leave is paid leave, paid either at the statutory rate (being the same rate as for other types of family-friendly leave), or at an enhanced rate if an employer utilises their discretion to offer Company Neonatal Pay.
- Any leave entitlement must be taken within 68 weeks of the child’s birth.
Employers need to take several important steps to ensure compliance with this new right and provide support for their employees regarding these updated family leave provisions designed to assist during an incredibly difficult time for new parents. By way of example, they should update their staff handbook to include a policy for Neonatal Care Leave. It is also essential to train HR teams and managers on how handle leave requests appropriately and to communicate with employees in a sensitive and supportive manner. Furthermore, employers must ensure that this type of leave is processed separately from standard parental leave to maintain clarity and compliance.
Changes to the Statutory Redundancy Pay Cap
The weekly pay cap for calculating statutory redundancy pay has increased to £719 as of 6 April 2025. This has consequently resulted in an increase to the total cap on Statutory Redundancy Pay, which now stands at £21,570.
Redundancy payments are now calculated using this higher weekly rate, improving financial support for affected employees. This will also affect certain tribunal compensation limits (see below). Employers must ensure to use this new weekly limit when calculating redundancy packages after this date. It is also important to update HR systems and review any existing potential redundancy cost forecasts to ensure they reflect the new rate accurately.
Tribunal Compensation Limits Increases
Employment Tribunal caps have also been revised, as of 6 April 2025, particularly in relation to unfair dismissal claims.
These are as follows:
- Basic Award (Unfair Dismissal): Still based on length of service and capped based on weekly pay (weekly limit now being £719).
- Compensatory Award Cap: Increased to £115,000 (or one year’s salary, whichever is lower).
The Vento Band – used by the Employment Tribunal as a guide when assessing the appropriate compensation to attribute to injury to feelings in cases of discrimination – have also seen an increase.
As of 6 April 2025, these stand at:
- Lower band: £1,200 to £12,100 (for less serious cases).
- Middle band: £12,100 to £36,400 (for cases that do not merit an award in the upper band).
- Upper band: £36,400 to £60,700 (the most serious cases).
For breach of contract claims the cap remains at £25,000 in Tribunal and, therefore, there is likely to still be many employees seeking to issues such claims via the court route which isn’t subject to such a limit.
Employers should be aware of the increased financial exposure associated with dismissal and discrimination cases. To reduce the risk of legal challenges, amongst other matters, it is essential that disciplinary and grievance procedures are up to date and followed in accordance with current employment law. Where appropriate, employers may also want to consider early settlement options to mitigate potential risks and costs associated with disputes.
For more information on the current changes, please visit our website to review our recent Employment Law Update.
Whilst the above changes have now taken effect, we do expect to see further several further employment law updates throughout this year and into the next, particularly due to the Employment Rights Bill 2025.
Employment Rights Bill 2025: What It Means for Employers and Employees
The UK Government has introduced the Employment Rights Bill 2025 (“the Bill”), marking a significant overhaul of workplace protections. The Bill is aimed at creating more fair and transparent conditions for employees while ensuring employers have clarity and consistency. The Bill introduces new rights and responsibilities that all businesses and employees should take note of and prepare for. Below is a summary of just some of the key changes likely to have an impact.
Unfair Dismissal Protections
- Employees will be able to claim unfair dismissal from the first day of their employment (this previously having a one-year continuous service qualification period, and a 2-year qualification period in more recent years).
- A probationary period (likely of up to 9 months, but this it yet to be confirmed) may apply, during which standard dismissal rules are modified.
With this, employees gain immediate job security and support, while employers will need to consider and update their recruiting processes and policies accordingly.
Family-Friendly Rights
- Rights to paternity, parental, and bereavement leave will be accessible from the first day of work.
- Statutory Sick Pay (SSP) will be paid from the first day of absence, removing the current 3-day waiting period.
There were a number of changes to broadened family-friendly rights last year in April 2024, and this trend looks to be continuing in the Bill to provided further rights and support to employees.
Ending Exploitative Practices
- Zero-Hours Contracts: Workers who routinely work regular hours, based on a reference period, will be able to request a contract reflecting those hours. This aims to limit the misuse of zero-hours arrangements. There will also be requirements for reasonable shift notice and fair compensation for shifts being removed on short notice.
- ‘Fire and Rehire’ Restrictions: Look to limit loopholes which currently enable employers to dismiss staff to force them onto less favourable terms, unless there’s a demonstrable, exceptional financial necessity.
Employers will therefore need to review contractual practices, particularly in sectors relying on flexible or temporary staffing.
Strengthened Worker Protections
- Anti-Harassment Duties: Employers will be legally required to take “all reasonable steps” to prevent harassment, including from customers or third parties. This builds on the obligations placed on employers at the end of last year under the Worker Protection (Amendment of Equality Act 2010) Act 2023.
- Collective Redundancies: The intention is to introduce a business-wide threshold for redundancies taking place across multiple establishments, which would see an increase on collective consultation being required.
- Flexible Working: All employees will have the right to request flexible working from the first day of their employment, and employers must accommodate these requests where reasonable. Whilst the right to flexible working is not changing, per se, the Bill intends to make it more difficult for employers to show a request is unreasonable, the idea being for flexible working to be the default.
As a result of this, businesses must ensure compliance with new redundancy procedures and be equipped to handle a possible rise in flexible working requests.
Overall, the changes that have been implemented in 2025 so far signal a broader trend of strengthening worker protections while clarifying obligations for employers. This is likely to remain the case for the proposed future changes likely to come about once the Bill is finalised and receives Royal Assent from Parliament. Please contact our Employment Law team should you have any questions in respect of the above changes or require assistance complying with the same.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
