Employment Law Changes for Employers – Effective 1 April 2025

7th Apr 2025

Author: Mohammed Balal

As of 1 April 2025, several important changes to Employment Law have come into effect across the UK, bringing new responsibilities for employers and increased protections for employees.

The Government introduced these changes to raise workplace standards and strengthen employee rights. While they offer greater support for workers, they also present financial and administrative implications for businesses of all sizes.

Mohammed Balal, Employment Law Specialist at Butcher & Barlow, outlines what these changes mean for employers and how best to respond.

Neonatal leave and pay

Effective from 6 April 2025, the Neonatal Care (Leave and Pay) Act 2023 grants statutory leave and pay entitlements for parents of babies born prematurely or requiring extended care in neonatal units.

Eligibility: One week of leave for every week the baby is in neonatal care, up to 12 weeks.

Pay: Neonatal Pay is subject to similar rules as Statutory Maternity and Paternity Pay, including a qualifying period and earnings threshold.

Employers should update their policies and payroll systems now to reflect this new entitlement.

National Minimum Wage and National Living Wage increases

 

New National Minimum Wage (NMW) and National Living Wage (NLW) rates now apply. Employers are legally required to pay staff according to these revised thresholds:

Age	Before	1 April 2025
21 and Over	£11.44	£12.21
18 to 20	£8.60	£10.00
Under 18	£6.40	£7.55
Apprentice	£6.40	£7.55

Employers must check that all workers receive at least the applicable minimum wage and to review pay scales and contracts to account for these increases.

Increased Statutory Sick and family-related pay

From 6 April 2025, several statutory pay rates increased:

Entitlement	Before	1 April 2025
Statutory Sick Pay (SSP)	£116.75	£118.75
Statutory Maternity	£184.03	£187.18
Statutory Paternity	£184.03	£187.18
Adoption	£184.03	£187.18
Shared Parental	£184.03	£187.18
Parental Bereavement Pay	£184.03	£187.18

Detailed breakdown of family related pay

Statutory Maternity Pay: Paid at £187.18 per week for the first six weeks, which is equivalent to 90% of the employee’s average weekly earnings. For the remaining 33 weeks, the rate continues at £187.18 or 90% of average weekly earnings, whichever is lower.

Statutory Paternity Pay: Paid for up to two weeks at £187.18 per week or 90% of average weekly earnings, whichever is lower.

Statutory Adoption Pay and Statutory Shared Parental Pay: Paid at £187.18 per week for the first six weeks, followed by either £187.18 or 90% of average weekly earnings for the remaining 33 weeks — again, whichever is lower.

Statutory Parental Bereavement Pay: Paid at a rate of £187.18 per week or 90% of average weekly earnings, whichever is lower.

Employers should configure their payroll systems to calculate these entitlements accurately and that employee-facing documents such as handbooks and policy guides are updated to reflect the current statutory pay framework.

Employer National Insurance Contributions (NICs)

Two notable changes to employer NICs are now in force:

NIC rate increased from 13.8% to 15%

Threshold at which contributions begin lowered from £9,100 to £5,000

These changes will increase employment costs for many businesses, particularly for those with large numbers of lower-paid employees.

Businesses may need to adjust their budgeting and payroll systems to account for the increased costs.

Employment Rights Bill

Some aspects of the Employment Rights Bill, introduced in October 2024, are now in effect or progressing towards implementation. Key provisions include:

Unfair Dismissal: The bill proposes the removal of the two-year qualifying period for employees to claim protection against unfair dismissal. This will increase the number of employees eligible to claim unfair dismissal after relatively short periods of service.

Zero-Hours Contracts: The bill also includes proposals to ban zero-hours contracts, which may significantly affect businesses that rely on flexible working arrangements.

Increased Rights for Gig Workers: Gig economy workers will receive greater legal protections, including the right to request regular working hours and better access to benefits.

Employers should keep track of updates and plan for further legislative changes anticipated later in the year.

Gender pay gap reporting

From 5 April 2025, businesses with 250 or more employees must publish annual gender pay gap data, with the first reports due by 30 March 2026. The key reporting requirements include:

Basic Pay: Pay disparities across all pay bands.

Bonuses: Differences in bonus payments between male and female employees.

Employers should begin preparing by collecting the relevant data and conducting internal audits to identify any disparities. Ensuring compliance will be critical for businesses that wish to avoid potential penalties or reputational damage.

Redundancy pay and unfair dismissal compensation

Effective from 6 April 2025:

• The cap on unfair dismissal awards has increased to £118,223 or 52 weeks of gross pay, whichever is lower.
• The weekly pay cap for redundancy calculations has increased from £700 to £719.

Employers should now update their redundancy policies to reflect these changes. Furthermore, these changes may result in higher compensation payments and should be factored into any redundancy or dismissal planning.

What Employers should do now

Now that these updates are in force, it is important that employers take the necessary steps to remain compliant and avoid potential legal or financial risks. These changes will increase costs, particularly in areas like wages, benefits, and employer NIC contributions, but they also represent important advancements in workers’ rights. We recommend:

• Reviewing and updating employment contracts and policies, including sick leave, maternity leave and redundancy policies.
• Updating payroll systems to apply the latest statutory rates.
• Auditing internal data for gender pay gap reporting, including reviewing pay policies and adjusted salaries as needed.
• Monitoring developments related to the Employment Rights Bill.

Need support? We are here to help

At Butcher & Barlow, we understand that staying compliant with changing employment law can be challenging. Our Employment Law Team is here to guide you through these changes and ensure your business remains protected.

If you would like to discuss how these updates affect your business or need help reviewing your policies, please contact Mohammed on mbalal@butcher-barlow.co.uk or via telephone on 0161 764 4062.