As we move further into the second quarter of 2025, UK employers are navigating several important changes to employment law. While the Spring Statement introduced only minimal adjustments, many of the key announcements made during the Autumn Budget have now come into effect. Among the most notable updates are increases to National Insurance contributions, rises in the National Minimum and Living Wages, changes to statutory pay rates, and the introduction of Neonatal Leave and Pay. This blog takes a closer look at these major developments and what they mean for businesses and employees alike.
Increase in National Minimum Wage and Living Wage
From 1st April 2025, the UK saw another rise in minimum wage rates:
Ages 21 and over: Increased from £11.44 to £12.21
Ages 18 to 20: Increased from £8.60 to £10.00
Apprentice rate (ages 16 to 17): Increased from £6.40 to £7.55
These changes represent a 6.7% increase for those aged 21 and over, and a significant 16% rise for 18 to 20-year-olds. Additionally, the Real Living Wage, which some employers voluntarily pay, has risen to £12.60 across the UK and £13.65 in London. These pay rises are expected to benefit around 3 million workers and reflect the Labour government’s continued commitment to supporting low-paid workers, a central focus of their 2024 election campaign.
Rise in Employer National Insurance Contribution:
From 6 April 2025, employers saw a rise in National Insurance contributions:
1. Main employer NIC rate: Increased from 13.8% to 15%
2. Secondary threshold: Lowered from £9,100 to £5,000 per year
These changes are expected to increase payroll costs by approximately 2% for most businesses. To help mitigate the financial impact, the employment allowance will rise from £5,000 to £10,500 annually, to help offset some of the additional cost from the NIC contribution for employers.
Increase in Statutory Pay
Also effective from 6th April 2025, the following statutory pay rates have increased:
1. Maternity, paternity, adoption and shared parental pay: Up from £184.03 to £187.18 per week
2. Statutory Sick Pay (SSP): Up from £116.75 to £118.75 per week
3. Maximum weekly amount for redundancy and unfair dismissal calculations: Increased from £700 to £719. These increases are in place to ensure that statutory benefits remain aligned with rising inflation and cost-of-living pressures.
Introduction of Neonatal Leave & Pay
A key new policy introduced in April 2025 is Neonatal Leave and Pay, following the implementation of the Neonatal Care (Leave and Pay) Act 2023. This new right allows eligible employees to take up to 12 weeks of paid leave if their newborn requires neonatal care for more than seven consecutive days during the first 28 days of life. They will be entitled to one week of leave for each week their baby is in care, up to a maximum of 12 weeks. In this period, they will receive a statutory pay of £187.18 per week or 90% of their average earnings, whichever is lower.
Example: Cameron’s baby is born on 1st January and requires neonatal care until 22nd January. The qualifying period starts on 2nd January and runs through to 8th January meeting the seven-day threshold. Since the baby remains in care for three full weeks, Cameron qualifies for three weeks of neonatal leave and pay.
Looking Ahead: The Employment Law Bill (Expected 2026):
While April brought a flurry of updates, HR professionals and employers should also keep an eye on what’s ahead. The impending Employment Law Bill of 2026 is set to introduce more family-friendly reforms, including enhanced support for pregnant employees and the long-promised ban of exploitative zero-hour contracts.
Another major proposal is the removal of the two-year service requirement for bringing an unfair dismissal claim, a change that could significantly shift the balance of employee rights in the UK.
In summary, the changes implemented this April mark a significant step in the government’s efforts to create a fairer and more supportive workplace environment. While these updates require employers to adjust quickly, particularly in payroll and policy, many of the reforms offer meaningful benefits to workers and reflect a broader shift towards employee welfare and security. As a recruitment consultant within the Professional Services industry, covering HR, Finance and Business Support, it is imperitive we stay up to date with regulatory changes, allowing us to navigate the recruiting climate with confidence. If you have any questions, from needing some hiring support, to looking for your next HR role, get in touch!
📩 Angus@morepeople.co.uk
📲 01780 480 530
We are fortunate to be joined by Jennie Beasley and Oliver Tasker in the MorePeople Offices who will be hosting a training session on Employment Law Updates. If you would like to find out more on this session, click here!
