April 2025: Employment Law Changes
As of April 2025, several significant changes to UK employment law will come into effect, impacting SMEs. It's crucial for business owners to understand these updates to ensure compliance and manage their workforce effectively.
Changes to your Disciplinary Policy
A recent employment appeal tribunal (EAT) found that an employee who had gone on sick whilst on a period of paid suspension should have been paid full pay during the sickness period because their suspension policy did not specifically cover what would happen to pay in the event of sickness absence. This is not a legal change, however, this finding will act as case law for future hearings. To remedy this, FACT3 have made changes to your business’ disciplinary policy to ensure that in the event of an employee becoming absent due to sickness during a period of paid suspension, their pay can revert back to their contractual entitlement to sick pay, thus replacing any suspension pay. Please familiarise yourself with this addition to your policy, which can be found in the Hub from 6th April 2025.
National Minimum and Living Wage Increases
Effective April 1st 2025, the National Living Wage increases are as follows:
Aged 21+: £12.21 per hour
Ages 18-20: £10.00 per hour
Ages 16-17 and apprentices: £7.55 per hour
SMEs should review their payroll to accommodate these changes and ensure all employees are compensated accordingly.
Employer National Insurance Contributions
Starting April 6th 2025, Employer NICs will increase from 13.8% to 15%. Furthermore, the secondary threshold—the point at which employers begin paying NICs—will decrease from £9,100 to £5,000 annually. To mitigate this impact on smaller businesses, the Employment Allowance will rise from £5,000 to £10,500, potentially exempting some SMEs from paying NICs altogether.
SMEs should review their payroll to accommodate these changes and ensure all employees are compensated accordingly.
Neonatal Care (Leave and Pay) Act
From April 6th 2025, the Neonatal Care (Leave and Pay) Act grants parents up to 12 weeks of leave and statutory pay when their new born requires neonatal care. This entitlement is offered in addition to current maternity and paternity leave. To qualify at the time of the baby's birth, an employee must be one of the following:
A parent of the baby
An intended parent in the case of surrogacy
A partner of the baby’s mother who is not biologically related to the child but resides with them in a stable family relationship and intends to share parental responsibilities
For adoption, similar criteria apply.
Neonatal care must commence within the first 28 days after birth and must continue for a minimum of seven consecutive days.
There are three specific types of medical care that qualify as “neonatal care”:
Medical treatment provided in a hospital
Care received outside of a hospital after discharge, under the supervision of a consultant, which includes continued monitoring and healthcare professional visits
Palliative or end-of-life care
Businesses should update their parental leave policies and inform managers about this new right to support effected employees appropriately. If you are a FACT3 People client, your policies will be updated and available in the Hub from 6th April 2025.
Neonatal care pay is paid at the same rate as statutory family payments (please find below) or 90% of weekly earnings, whichever is lower.
Statutory Sick Pay and Parental Pay Increases (including new Neonatal Care)
Statutory payments will see the following increases:
Statutory Sick Pay: from £116.75 to £118.75 per week
Statutory Maternity, Paternity, Adoption, Shared Parental, Neonatal and Bereavement Pay: from £184.30 to £187.70 per week
SMEs must adjust their payroll systems to reflect these updated rates.
If you require any guidance on how to implement new policies or training your employees on the new employment laws, please reach out to us here.