Legal updates
5 mins read
Updated on 17 February 2025
Our subject expert
Simon Gilmour
Partner and Head of Employment Law
Chancellor Rachel Reeves delivered the UK’s Autumn Budget which outlined the new Employment Rights Bill, and means most businesses will face higher payroll costs from April 2025.
As usual, we have increased rates for minimum wage and other statutory payments happening in April as well as the significant changes to employer National Insurance Contributions (NIC) and thresholds and a new statutory right to neonatal care leave and pay. There are also some other potential changes on the horizon that could happen later this year which you will want to keep an eye on.
From 1 April 2025 minimum wage rates will increase as follows:
| Current rate | April 2025 | % increase | |
| National Living Wage for workers aged 21 and over | £11.44 | £12.21 | 6.7% |
| National Minimum Wage for workers aged 18 to 20 | £8.60 | £10.00 | 16.3% |
| National Minimum Wage for workers aged 16 to 17 | £6.40 | £7.55 | 18% |
| Apprentice rate | £6.40 | £7.55 | 18% |
The Government is taking steps to remove the 18–20 year rate completely to eventually achieve a single adult rate for those over 18. This is why we see a significant increase of 16.3% to the 18-20-year rate this year narrowing the gap between the two bands.
It’s important to remember that non-compliance with minimum wage law can have serious consequences for employers, including public naming and shaming and significant financial penalties so it’s important to check you’re compliant.
The statutory rates of pay that apply to the different types of family leave and sick pay are due to rise by 6.7% from April 2025. The new rates are as follows:
The following changes to Employers National Insurance Contributions (NICs) will apply from 6th April 2025:
These changes will of course have a compounding effect on payroll costs, particularly for those with larger workforces or employees earning above the reduced NIC threshold.
The tiny bit of good news is the employment allowance will be raised from £5,000 to £10,500. This is an allowance that eligible employers can set off against their employer NIC liability providing some relief, especially for smaller employers.
The removal of the £100,000 NIC liability threshold expands eligibility, meaning more employers and charities can offset some of the additional costs. If your business was previously excluded under the old rules, it’s worth reviewing your eligibility and ensuring you claim this allowance to mitigate the impact of rising NIC rates.
The Government has confirmed a new statutory right for employees to take up to 12 weeks leave (in addition to existing entitlements such as maternity and paternity leave) when their baby requires neonatal care within 28 days of birth and the hospital stay lasts 7 full days or longer.
Neonatal Care Leave (NCL) will be a Day one right and must be taken in the first 68 weeks of the baby’s birth. Whilst NCL can be taken while the baby is still receiving neonatal care, the basic idea is that it will be tagged onto the end of an employee's leave. Employees with babies in neonatal care are likely to already be taking some form of family leave, such as maternity or paternity leave. The aim is to allow them to extend their leave by taking NCL after their planned family leave ends, so they are compensated for the time their baby spent in neonatal care.
Parents with at least 26 weeks’ continuous service and earning above the lower earnings limit will also be entitled to Statutory Neonatal Care Pay (SNCP) at the same rate as other statutory family pay.
The new rights will apply to parents of babies born on or after 6 April 2025.
For further details read our practical guide.
The Employment Rights Bill is currently making its way through Parliament and one of the proposed measures in the Bill is that the entitlement to Statutory Sick Pay (SSP) will change in the following ways:
A consultation on the details has recently closed and we are awaiting the Government’s response. The main issue to be addressed is the appropriate percentage rate of earnings for SSP for low earners, with suggestions that it might range between 60% and 80% of normal pay, with a cap at the current weekly SSP rate.
It was originally expected that this change would happen in 2025. However, to avoid putting more financial pressure on businesses it may be that the government will delay the implementation until 2026.
A new law expected to come into force in April 2025 will give new rights to bereaved fathers and partners when a child’s mother dies.
Currently to be eligible for statutory paternity leave employees must have been employed for 26 weeks – the new law changes this for bereaved partners in cases where the mother of a newborn child has died making paternity leave a ‘day one’ right for bereaved partners.
It is also understood that the plan is to increase paternity leave for bereaved partners from two weeks to 52 weeks (although this has not yet been confirmed). As it stands the changes only relate to leave, rather than pay. We are awaiting further clarification on these points.
As we reported in our briefing, several key changes are coming up for employers as a result of the new Employment Rights Bill. The Bill is still making its way through parliament and is expected to be passed as an ‘Act’ later in 2025. That is not the end though because the Act itself needs supporting regulations which contain the finer details for how the new measures will work in practice.
The government has undertaken to openly consult with groups representing businesses and workers on several key measures contained in the Bill before the final regulations are published.
We also expect a consultation regarding a draft statutory Code of Practice on the new proposed 'Right to disconnect' for employees to be launched this year as well as a comprehensive review of the current family leave system.
All this will take time and so we aren’t expecting any significant changes to take effect until 2026.
About our expert
Partner and Head of Employment Law
Simon is a highly experienced employment lawyer who has been advising businesses on employment and HR matters since qualifying in 1994. As Head of Employment at Harper James, he works closely with businesses to solve complex people-related issues. Simon has spent more than 30 years advising businesses on complex workplace issues, including 18 years as a partner and Head of Department.
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