A look ahead to HR in 2025

There’s been much speculation about forthcoming amendments and updates to employment law under Labour, so we thought we’d start the new year off with a roundup of what we know so far is going to be changing this year. 

January 2025

Rolled Up Holiday Pay

Last year we saw a change which meant that employers whose holiday year commenced after April 2024 were able to pay rolled up holiday pay for workers who work irregular hours, such as casual workers or employees on zero-hour contracts.

For most employers, January 2025 sees the start of the new holiday year, meaning that all businesses will now be able to introduce rolled-up holiday pay, should they want to.

Rolled up holiday pay means that staff are paid an uplift on their hourly rate as they work, and don’t receive any pay when they take annual leave.   If you are considering introducing this method, then this must be clearly stated on the terms of hire or contract of employment and shown separately on the payslip. 

Rolled up holiday pay is calculated as follows:

• Statutory minimum entitlement: 20 days + 8 bank holidays = 28 days.
• Weeks: 28 days / 5 days = 5.6 weeks.
• Remaining weeks: 52 weeks in a year – 5.6 weeks entitlement = 46.4 weeks.
• Rolled-up holiday pay percentage: 5.6 weeks / 46.4 weeks x 100 = 12.07%

Fire and Re-hire

From 20 January, employers failing to comply with the statutory Code of Practice on Dismissal and Re-engagement will risk the claim of a protective award. This applies in situations where an employer proposes to change the terms for 20 or more employees via dismissal and re-engagement, triggering the need for collective consultation.  Failing to do this can result in employees being able to claim at an employment tribunal for a protective award of up to 90 days’ pay. Where the employer has failed to comply with the code, that award could be uplifted by up to 25% by the employment tribunal. See our previous newsletter on this subject.

April 2025

Hourly rate increases

New statutory rates will come into force, including:

• National Living Wage for over 21’s increases to £12.21
• National Minimum Wage for 18–20-year-olds increases to £10
• National Minimum Wage for 16–17-year- olds and Apprentice Rate increases to £7.55
• Statutory Sick Pay increase to £118.75 per week
• Statutory Maternity Pay and other family related leave pay increases to £187.18 per week
• Lower Earnings Limit increases to £125 per week.

The new rates will apply from the next pay reference period after the increase, this means that a workers pay might not increase straight away.  For example, an employee whose pay reference period is 16^th of the month to the 15^th of the following month will only be entitled to the new rate from 16^th April. 

Neonatal Leave

Neonatal care leave and pay is also expected to come into force in April, although regulations needed to do this still have to be put before Parliament. This will give employees a new right to time off work when a baby they have responsibility for is in hospital receiving neonatal care.

May 2025

Real living wage

Whilst not a legal change, employers signed up to pay the Real Living Wage must increase pay to £12.60 in UK (£13.85 in London) by 1st May if they wish to retain their accreditation from the Living Wage Foundation.

Other reforms expected in 2025

A new right to paternity (bereavement) leave is expected to come into force, although regulations are still needed to do this. These are expected to be in place for this new right to come into effect from April 2025. This will give fathers or non-birthing partners access to paternity leave in cases where a mother, or a person with whom a child is placed or expected to be placed for adoption, dies. The leave is likely to operate in a way similar to maternity leave, and last for up to 52 weeks.

Employing Children 

The Children’s Wellbeing and Schools Bill, if it passes into law, will bring in several changes to how children are employed, including amendments to the rules on their working hours and the need for all employers to have a permit to employ them.

Further plans for reforming the law

We also expect to see further developments relating to the Employment Rights Bill, although changes under this Bill are not expected to come into force until 2026.

If you would like further information on any of the above, or require any HR support, please do not hesitate to contact us.