At the start of a new financial year, we set out the key changes to employment law to expect over the course of 2025/26 and beyond.
There are going to be significant changes to employment law during the 2025/26 financial year and further into 2026, which employers should be aware of. We have summarised the key recent and forthcoming changes below to assist employers in preparing for the months ahead.
Annual increase in statutory payment rates: From 1 April 2025, statutory payments increased for employees who need to rely on them. This includes statutory sick pay, which increased from £116.75 per week to £118.75 per week and statutory maternity pay, which rose from £184.03 per week to £187.18 per week.
Annual increase in National Minimum Wage: From 1 April 2025, the National Living Wage (applicable to those aged 21 and over) increased from £11.44 per hour to £12.21 per hour. The National Minimum Wage hourly rate for 18–20-year-olds increased from £8.60 to £10.00 and the National Minimum Wage hourly rate for those under 18 and apprentices increased from £6.40 to £7.55. You can find out more about this in our previous article on these changes.
National Insurance increase: From 6 April 2025, the National Insurance contributions rate for employers increased from 13.8% to 15% and the secondary threshold at which employers must start paying NICs decreased from £9,100 to £5,000. To assist employers with these changes, the Employment Allowance has increased from £5,000 to £10,500 and the £100,000 eligibility threshold for the Employment Allowance has been removed.
Neonatal care leave and pay: The new statutory right to neonatal care leave came into force on 6 April 2025. This is available to any employee whose newborn baby receives at least 7 continuous days of neonatal care during the first 28 days of their life. Most employees who are entitled to this type of leave will also be entitled to statutory neonatal care pay. You can find out more about this new statutory right in our previous article. We would recommend that employers have a comprehensive neonatal care leave policy setting out the relevant eligibility requirements and details for their employees. Please contact us if you don’t have a policy in place.
Employment Rights Bill: We discussed the recent changes that have been made to the Bill in our article of last month and we provided an initial overview of the key areas of focus in an article and webinar last year. Most of the reforms are expected to take effect in 2026 (with the day one unfair dismissal right expected to come into force in Autumn 2026).
The Paternity Leave (Bereavement) Act 2024: This Act received royal assent back in 2024 and is expected to take effect sometime this year. An implementation date has not yet been confirmed but the Act will remove the minimum service requirement of 26 weeks for fathers and partners to take paternity leave where the mother (or adoptive parent) dies shortly after birth.
Pension Schemes Bill: Last year, the government confirmed that it would be introducing this Bill into Parliament in 2025. No dates have been confirmed yet, but the Bill aims to improve existing policies and help people plan for retirement.
Draft Equality (Race and Disability) Bill: The Government is looking to introduce this Bill to set out a legal right to equal pay for ethnic minorities and those with disabilities. No dates have been confirmed yet but it’s expected to be published in 2025 for consultation.
Right to disconnect: The plan to enforce a legal right to disconnect in the UK was mentioned in the King’s Speech in 2024 but the right was not included in the Employment Rights Bill. The Government has confirmed that the right will be introduced through a Statutory Code of Practice instead and, although no dates have been confirmed yet, it’s expected to enter consultation during 2025.
Women and Equalities Committee Inquiry: An inquiry was launched into paternity and shared parental leave, with a call for evidence ending on 7 February 2025. Oral evidence took place in the House of Commons on 1 April 2025 and the full report is likely to be produced later this year. The report will set out the Committee’s findings and options for reform that will incentivise shared childcare responsibilities between parents.
There will of course be further developments as we progress through the year but if you have any questions regarding any of the above changes at this stage, please do get in touch at [email protected].
