The employment landscape in the UK is set to undergo significant changes in April 2025. This guide provides an overview of the key legislative updates and their impact on employers and employees alike.
- National Minimum Wage Increases
Effective April 2025, the UK government has announced the following increases to the National Minimum Wage (NMW):
- Aged 21 and over (National Living Wage): £12.21 per hour
- Aged 18-20: £10.00 per hour
- Under 18: £7.55 per hour
- Apprentices: £7.55 per hour
Employers must ensure they comply with the new rates to avoid penalties and maintain compliance with HMRC regulations.
The Government is gradually phasing out the 18–20-year rate to establish a single adult rate for those over 18. This year, the 18–20-year rate sees a significant 16.3% increase, narrowing the gap between the two bands. These increases, particularly following significant minimum wage rises in recent years and the upcoming rise in employer National Insurance contributions, will have a major impact on businesses.
Employers who previously didn’t have to worry about falling below minimum wage thresholds could now be at risk of an inadvertent breach—especially when factoring in additional hours worked, salary sacrifice schemes, and other pay deductions. For context, an employee earning the new National Living Wage of £12.21 per hour and working a 37.5- hour week will earn just under £24,000 per year. Employers should review their starting salaries and identify roles that may now be close to minimum wage thresholds.
2. Increases to Statutory Rates for Family Leave, Sick Pay, and Redundancy Pay
From April 2025, the statutory rates of pay that apply to the different types of family leave and sick pay will rise by 6.7%.
- Statutory Sick Pay (SSP): Increasing to £118.75 per week (currently £116.75).
- Family Leave Payments: Statutory maternity, paternity, adoption, neonatal care, shared parental, and parental bereavement pay will rise to £187.18 per week (currently £184.03).
- Lower Earnings Limit: The minimum weekly earnings required to qualify for these payments will increase from £123 to £125.
- Maternity Allowance Lower Earnings Limit: Remains at £30 per week.
- Statutory Redundancy Pay: An increase is expected in April 2025 to the cap on a week’s pay for calculating statutory redundancy payments, but the exact figure is yet to be confirmed
3. Carer’s Leave Entitlement
A new statutory right to unpaid leave for carers will be introduced, allowing employees with caregiving responsibilities to take up to one week of unpaid leave per year. This leave:
- Can be taken flexibly (e.g., single days or a whole week).
- Does not require a minimum length of service.
- Applies to employees caring for dependents with long-term care needs.
Employers should update leave policies accordingly and communicate the changes to staff.
4. Changes to Flexible Working Rights
The right to request flexible working will be extended from day one of employment. Key changes include:
- Employees will have the right to make two flexible working requests per year.
- Employers must respond to requests within two months.
- Employers must consult with employees before rejecting a request.
These changes aim to promote a more adaptable working environment for employees.
5. Enhanced Protections Against Sexual Harassment
Employers will have a new duty to take proactive steps to prevent sexual harassment in the workplace. Key requirements include:
- Implementing robust policies and training programs.
- Conducting risk assessments to identify areas of concern.
- Taking swift action in response to complaints.
Failure to comply may result in increased tribunal claims and financial penalties.
6. Changes to employers’ National Insurance contributions (NICs)
As an employer, you pay secondary Class 1 National Insurance contributions (NICs) on all employees’ earnings above the secondary threshold, which in the 2024/25 tax year is £9,100.
Employers’ National Insurance rates will be raised from 13.8% to 15%, effective April 2025.
The employer NICs secondary threshold will also be reduced from £9,100 to £5,000 per year, meaning more employers will become eligible to pay NICs.
These changes will increase the cost of employing staff as a result. So, to help minimise the impact on smaller businesses, the Employment Allowance will also increase.
Disclaimer: This guide is for informational purposes only and should not be considered legal advice. Always consult an employment law specialist for tailored guidance.