Employment, contingent workforce and immigration | UK Regulatory Outlook March 2025

April changes for employers

1 April 2025

• Minimum wage: The National Living Wage will increase from £11.44 to £12.21 an hour and the National Minimum Wage for 18 to 20 year olds will rise from £8.60 to £10.00 an hour.
• National insurance contributions: The rate of employer national insurance will increase by 1.2% to 15% from 6 April 2025 and the secondary threshold (the level at which employers become liable to pay national insurance on each employee's salary) will reduce from £9,100 per year to £5,000 per year.

6 April 2025

• Statutory "family" leave payments: Statutory maternity pay, maternity allowance, statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay will increase to £187.18 (up from £184.30). The lower earnings limit (the weekly earnings threshold for qualifying for the above payments, except maternity allowance) will be £125 (up from £123). For maternity allowance the threshold remains £30 a week.
• Statutory sick pay: The weekly rate will increase to £118.75 (up from £116.75).
• Statutory neonatal leave and pay: A new right to neonatal leave (up to 12 weeks) and pay will come into force from 6 April 2025 for eligible employees and will apply to children born on or after 6 April 2025 where neonatal care starts within 28 days of birth and where the child goes on to spend seven or more continuous days in neonatal care. Employers will need to ensure they have policies in place reflecting this new statutory entitlement. Statutory neonatal pay is expected to be paid at the same rate as the other "family" leave payments – see above.
• Increased compensation limits: Where an employee's effective date of termination falls on or after 6 April 2025, the limit on a week's pay for tribunal awards and other statutory payments, including a statutory redundancy payment will increase from £700 to £719.The maximum compensatory award for unfair dismissal increases from £115,115 to £118,223 and the minimum basic award for certain unfair dismissals (including health and safety dismissals) increases from £8,533 to £8,763.

Employment Rights Bill: Responses to consultations and proposed amendments

Earlier this month the government published its responses on a number of initial consultations published at the end of last year on proposals in the Employment Rights Bill. These cover: zero-hours contracts and agency workers, collective redundancy remedies, trade union legislation and statutory sick pay. Alongside this, the government has proposed a number of amendments to the bill, including doubling the maximum protective award for breach of collective redundancy rules and extending protection for zero hours and low hours workers to agency workers (see our Insight for more on these proposals).

The bill is now being considered by the House of Lords and it is still anticipated that the majority of the provisions will not come into force until 2026, although there are some limited exceptions around trade union rights and which are due to come into force when the bill receives Royal Assent (expected this year) or shortly after.

We are regularly updating our microsite on the reforms to reflect the latest position.

Consultation published on mandatory ethnicity and disability pay gap reporting

As part of its proposed draft Equality (Race and Disability) Bill, the government has opened the consultation to seek views on how to implement mandatory ethnicity and disability pay gap reporting for large employers (more than 250 employees) in Great Britain, with changes likely to be implemented in 2026. It is also proposed that the bill will include measures ensuring equal pay rights protect workers discriminated against based on race or disability. Employers will be prohibited from outsourcing to avoid their equal pay obligations. 

Green paper published on reforming benefits and support to 'Get Britain Working'

Attracting much media attention, the government has published a Green Paper "Reforming Benefits and Support to Get Britain Working", including proposals to support employers in engaging those who are disabled or struggling with ill-health conditions.

Remote and hybrid working: call for evidence launched

A call for evidence has been published by the House of Lords Committee on home-based working as part of its inquiry into the effects and future development of remote and hybrid working in the UK.

The inquiry will address the challenges and opportunities for workers and employers, the impact on productivity, and any wider consequences of remote and hybrid working for the UK economy and society. It will also consider the extent to which these impacts vary depending on the characteristics of the worker or employer and consider any policies the government could enact in this area. It will report by 30 November 2025. The deadline for submissions is 10am on 25 April 2025.

Big changes ahead for UK contingent workers with new laws looming and increased HMRC tax enforcement

The UK government plans major tax and legal changes to contingent workforce arrangements in the next two years that will have a big impact on the commercial models of hirers, staffing companies, gig worker platforms and employment intermediaries.

Recent updates to the Employment Rights Bill offer more clarity on the government's plans to provide agency workers with guaranteed hours and to bring umbrella companies into the scope of recruitment regulation.

The government is also continuing to work on its plans to eradicate use of non-compliant "umbrellas" by introducing new legislation to make "agencies" responsible for ensuring that the correct income tax and national insurance contributions are deducted and paid to HMRC. Additionally, HMRC has increased its tax enforcement activity in this space.

Many will need to restructure how they supply or use contingent workers if they are to survive. But, while there are many rumours about what the government's final plans will involve, it is not yet clear what exactly this new environment will look like.

Hirers, staffing companies and employment intermediaries will, therefore, be looking to take measures to ensure they can trade through the changes – many of which are scheduled to come into force next spring or, in the case of some HMRC tax enforcement activity, are already occurring.

They will be looking to minimise disruption and lost revenue as well as to maximise any opportunities that these plans could present. 

What is likely to happen, what is still uncertain, and what can be done now by hirers, staffing companies and employment intermediaries? 

Read our Insight for more detailed analysis of the impact of the proposals in the Employment Rights Bill on users and suppliers of agency workers, proposed new umbrella legislation, HMRC enforcement action and more.