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As 2025 progresses, UK businesses must prepare for significant employment law changes coming into effect this April.
Recent employment law changes will impact wages, National Insurance contributions, and workers' rights. Nicola Morrison, Director at The HR Department Leicester and North West Leicestershire, says employers must take action now to ensure compliance and effectively support their workforce. As expected each April, the National Minimum Wage will rise again this year, with increases that surpass inflation. For workers aged 21 and older, the National Living Wage will increase from £11.44 to £12.21 per hour, a 6.7% rise. Younger workers will see even larger percentage increases, with those aged 18-20 receiving £10 per hour (up from £8.60) and 16-17-year-olds, along with apprentices, now earning £7.55 per hour instead of £6.40. These changes mean employers must assess their payroll budgets carefully to ensure they can manage the additional costs throughout the year. The most significant financial change for employers comes from the rise in National Insurance Contributions (NICs). Employer NICs will increase from 13.8% to 15%, and the threshold at which businesses must start paying these contributions will drop from £9,100 to £5,000. This means businesses will have to pay NICs on a much larger proportion of their payroll. However, there is some relief: the Employment Allowance has been increased from £5,000 to £10,500, and the previous £100,000 threshold for claiming this allowance has been removed, allowing more businesses to benefit. A major change in employment rights is the introduction of The Neonatal Care (Leave and Pay) Act 2023, taking effect from 6 April 2025. This will allow parents of newborns requiring hospital care within their first 28 days of life to take up to 12 weeks of paid leave, provided the hospital stay lasts at least seven days. Unlike other family leave policies, this entitlement will be available from day one of employment. Statutory neonatal care pay will also be provided for eligible employees with 26 weeks of continuous service and average weekly earnings of at least £125. Nicola, explains: “The introduction of neonatal leave is a crucial step forward for working parents. This ensures they no longer have to rely on employer discretion when facing the stress of a child in intensive care. By removing financial uncertainty, businesses can support employees at a critical time in their lives.” Employers will need to update HR policies, payroll systems, and employee handbooks to reflect this change. Those who integrate neonatal leave effectively will not only ensure compliance but also strengthen their reputation as a supportive and family-friendly workplace. Nicola added: “April always brings employment law updates, and 2025 is no different. While some of these changes may pose financial and administrative challenges, proactive businesses can turn them into opportunities to improve employee welfare and engagement. Ensuring compliance now will prevent costly mistakes later.” For expert HR and legal advice on managing these employment law changes, contact The HR Department Leicester and North West Leicestershire.
