8 UK Employment Law changes to watch in 2025

Disclaimer: The information contained in this article is general information only and accurate as of 20 March 2025. Although all efforts have been made to ensure the accuracy of the information presented, Sonder takes no responsibility for any errors or omissions presented. Please contact a legal representative for individual advice.

The UK employment landscape is undergoing significant changes in 2025, with the government proposing a package of reforms through the Employment Rights Bill. The bill contains 28 individual reforms aimed at strengthening employee protections across a wide range of sectors, intending to support higher living standards, a stronger economy, and increased opportunities.

Some of the proposed reforms are already in effect, while others are expected to be confirmed later in 2025 and rolled out by 2026. So, how can employers support their HR teams, company leaders, and the wider workforce to stay informed and ready for potential changes? This guide outlines eight proposed changes to watch, along with practical considerations for preparing ahead.

The Worker Protection Act 2023, which amends the Equality Act 2010, came into force on 26 October 2024. The Act introduces a new duty on employers to take “reasonable steps” to prevent sexual harassment in the workplace. This includes taking proactive measures rather than responding only after an incident occurs. It also extends protections to cover harassment by third parties, such as customers, clients, and suppliers.

Considerations for Employers

While specific compliance steps will depend on the circumstances of each workplace, recommended actions might include:

• Reviewing and updating internal policies to explicitly address psychosocial risks, including sexual harassment, and including clear examples to help define harassment Providing regular training to support a respectful workplace culture.​
• Establishing clear, confidential channels for reporting concerns and ensuring appropriate follow-up.

A 2023 “Sexism in the City” inquiry highlighted persistent issues of sexual harassment and bullying in the financial services industry.The report found that 26% of reported cases involved bullying and harassment and 23% involved discrimination. In response to these concerns, regulators proposed setting minimum standards on how firms address workplace misconduct.

On 12 March 2025, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) announced they would not be implementingplanned rules to regulate non-financial misconduct. The FCA and PRA cited concerns about overregulation and a broader government initiative to reduce red tape.

Considerations for employers

While new regulatory requirements won’t be introduced at this stage, financial services firms may choose to take proactive steps to promote strong workplace culture and ethical standards. Common approaches include:

• Reviewing and reinforcing misconduct policies to explicitly address bullying, harassment, and discriminationStrengthening misconduct reporting mechanisms to support transparency and accountability in the workplace
• Conducting internal audits on workplace culture to proactively identify and resolve non-financial misconduct issues

The right to neonatal leave and pay came into effect on 6 April 2025, providing parents with up to 12 weeks of leave and pay if their baby requires neonatal care. This new entitlement, which is expected to benefit up to 60,000 new parents, is in addition to existing parental leave rights and in many cases will follow, paternity or maternity leave. Eligible employees may qualify for this leave from day one of their employment, including biological parents, intended parents in cases of surrogacy, or individuals with a recognised relationship to the baby’s mother.

During this time, employees who meet the relevant criteria may be entitled to Statutory Neonatal Care Pay (SNCP), currently set at £123 per week.

The Employment Rights Bill also includes provisions for miscarriage bereavement leave. If enacted, this will grant mothers and their partners the right to two weeks of paid leave following a miscarriage that occurs before 24 weeks of pregnancy. This proposal aligns with existing entitlements for parents who experience stillbirths after 24 weeks or the loss of a child under 18, recognising the profound impact of early pregnancy loss.

Roxie Hanlon, People and Talent Lead at Alderson James, explains why this is critical for supporting employees at work:

“Imagine going through that loss, of having a miscarriage before 24 weeks and having to ring your boss and [ask] “Can I use my annual leave so I can grieve? Can I take some sick days so I can be with my family? In 2025, we need to be doing more to support our female staff and our women.”

Considerations for employers

Here are some key steps employers can take to provide compassionate and effective support for employees experiencing pregnancy loss or neonatal care needs:

• Communicating the new rights for neonatal leave and pay, as well as miscarriage bereavement leave
• Providing education and resources on pregnancy loss and neonatal care to all employees, not just expecting or new parents
• Offering employee wellbeing support using a platform like Sonder, so employees and immediate family members can access personalised mental health services and medical support 24/7.

In January 2024, the UK government introduced reforms to simplify holiday entitlement and pay calculations, particularly for workers with irregular hours, zero-hours contracts, or part-year schedules.

One of the key updates is rolled-up holiday pay, allowing eligible employees to include an additional amount in each payslip to cover holiday pay, rather than disbursing it when leave is taken.

Considerations for employers

Employers may wish to take proactive steps to align their payroll processes, contracts, and policies with the updated regulations:

• Implementing clear policies for calculating and administering holiday pay, ensuring compliance with the new regulations
• Communicating any changes clearly to affected staff to maintain transparency
• Regularly reviewing compliance to ensure holiday pay practices align with legal requirements

Proposed reforms under the Employment Rights Bill (ERB) aim to continue reshaping workplace flexibility. While the Employment Relations Act came into effect in April 2024 – enabling employees to request flexible work arrangements, further changes are expected to strengthen these rights.

Employers are expected to maintain clear and transparent processes for managing flexible working requests. Any flexible work refusals should be explained clearly and based on reasonable grounds.

Considerations for employers

While some organisations still have concerns about productivity or operational impact, employers can adopt a fair and consistent approach by:

• Aligning flexible working policies with regulations, including outlining the two-month response timeframe and requirement for a clear, justified reason for refusals
• Training managers to handle flexible working requestsconsistently and fairly
• Standardising the flexible working request and approval process, including offering a route for employees to appeal a refusal

Under Labour’s Plan to Make Work Pay, from 1 April 2025 the National Minimum Wage and National Living Wage rates were set to increase as follows:

• Employees aged over 21: £12.21 per hour (up from £11.44)
• Employees aged between 18 and 20: £10 per hour (up from £8.60)
• Employees aged under 18, including apprentices: £7.55 per hour (up from £6.40)

Considerations for employers

Employers should note the following considerations for managing the financial impact of these wage changes by:

• Reviewing payroll and budget to assess t how many employees are affected and the total cost impact
• Considering how changes may affect broader pay structures, including pay differentials between junior and senior roles
• Updating payroll and HR systems to ensure the new rates are implemented correctly

Around 1.2 million employers in the UK are expected to be impacted by the proposed changes to National Insurance Contributions (NICs). Announced in the Autumn 2024 budget, the following changes are active from 6 April 2025:

• Employer’s secondary Class 1 contribution will increase from 13.8% to 15%
• The threshold for employer NICs will reduce, with contributions becoming payable once an employee earns £5,000 (down from £9,100)
• The Employment Allowance will rise from £5,000 to £10,500 and will be available to all eligible employers, removing the previous £100,000 threshold

Considerations for employers

These changes will likely increase employment costs for many businesses. Employers may wish to prepare by:

• Calculating the projected cost impact based on new thresholds and contribution rates
• Reviewing workforce planning to evaluate cost sustainability under the revised NIC regime
• Ensuring HR and payroll teams are briefed on the changes and equipped to handle employee queries

Gender pay gap reporting has been mandatory since 2017 for UK employers with 250 or more employees. These organisations are required to publish annual reports that include:​

• The mean and median gender pay gaps for hourly pay
• The mean and median bonus pay differences between male and female employees
• The proportion of men and women receiving bonuses
• The distribution of male and female employees across pay quartiles

Reporting deadlines are 4 of April each year for private and voluntary sector employers and 30 March for most public authority employers.

The King’s Speech on 17 July 2024 outlined plans to extend pay gap reporting requirements to include disability pay gaps. This means employers with more than 250 staff are required to publicly report on pay differences between disabled and non-disabled employees. The government reaffirmed its commitment to this initiative in January 2025, emphasising the importance of transparency when addressing pay disparities.

There is also increasing support for mandatory ethnicity pay gap reporting. Leading companies, such as BT and Aviva, have publicly backed initiatives to track and disclose ethnic pay differentials.

Considerations for employers

While not yet legislated, over 120 large UK companies have voluntarily adopted broader pay gap reporting practices.. Organisations looking to follow suit may consider:

• Conducting comprehensive pay audits to identify and address pay disparities across gender, disability, and ethnicity
• Developing action plans to address any pay gaps identified and regularly monitor progress
• Seeking guidance from external experts or consultants to adopt leading practices and support internal reporting efforts

Each of the active or proposed changes to UK employment law focus on supporting employees and holding employers accountable for creating a positive workplace. With reforms spanning flexible working rights, neonatal leave, fair pay, and more, businesses should adopt a proactive approach to both compliance and employee wellbeing.

This is where Sonder comes in. Our 24/7 safety, medical, and mental health support gives employees the reassurance they can access help whenever they need it. Employers can also benefit from Sonder’s risk management tools, which support a proactive, inclusive approach to evolving workplace requirements.

Ready to take the next step in employee wellbeing and organisational resilience? Book a free Sonder demo today.