27th March 2025
What’s On The Horizon For Employers This April?
This April, a significant number of employment law changes are coming into force. These changes are anticipated to affect millions of employees and employers. Here are the changes to look out for, how you can prepare, and the key pitfalls to avoid.
An increase to the Minimum and National Living Wage
From 1st April 2025, the National Living Wage will increase by 6.7%, from £11.44 to £12.21. The National Minimum Wage, which affects workers aged 18-20, will increase from £8.60 to £10.00 an hour, the largest increase to the National Minimum Wage ever. Apprentices will also see their pay rate increase, going from £6.40 to £7.55 an hour.
These measures are anticipated to go further to eventually remove age bands entirely, but the changes in their current form will affect more than 3 million workers.
Employers need to assess all of their pay rates for their workers and employees. In particular, they should pay attention to salaried staff whose salaries work out at close to or just at minimum wage and assess employees who might pose a risk of underpayment. These include staff who work over their contracted hours, who are required to travel or to do overnight stays where they need to be on call, and who have authorised deductions from their pay that might take them under minimum wage e.g. those under a salary sacrifice arrangement, or those who have to pay for their own uniforms. Employers need to ensure that these workers and employees are not falling below minimum wage for their hours worked.
A hike in National Insurance contributions
Chancellor Rachel Reeves announced the increase to employer National Insurance contributions as part of her first budget as Chancellor. Reeves announced a 1.2% hike to employer NI contributions coming into force for the 2025/2026 tax year, bringing employer contributions to 15%.
Reeves also announced that the secondary threshold, the point at which employers start paying
National Insurance on an employee’s salary will be reduced from £9,100 to £5,000 per year. This will chiefly affect employers with part-time employees, who will now be required to pay NI. However, to account for the increase in NI and the widening of the secondary threshold, Reeves announced an increase to the Employment Allowance for small businesses from £5,000 to £10,500. The Employment Allowance enables eligible employers to reduce their liability.
Employers should have budgeted for the hike in NI contributions and will have to be fiscally aware of the cost of their obligations on their businesses. In particular, employers who have part-time staff who may not have previously made employer contributions should look into whether they are now required to make contributions, and small businesses should look into whether they could stand to benefit from the Employment Allowance.
A new right for parents with children in neonatal care
Employees with babies born after 6th April 2025 will now have a right to take leave to care for their child if their child receives neonatal care.
The new right will affect employees whose babies require neonatal care in the baby’s first 28 days and entitles them to take leave for up to 12 weeks. The right is expected to support around 60,000 working parents by enabling them to take time off to care for their children.
Under this new right, some employees will be eligible for statutory neonatal care pay during their leave. Employees will qualify for this if they follow the notification requirements, if they have 26 weeks of service at the time of taking their leave, and if they meet a ‘lower earnings limit’ set by the Government. The government has introduced two ‘tiers’ of notice requirements for neonatal care leave and pay. However, in practice, employers are likely to need to be flexible with these notice requirements due to the delicate nature of the circumstances in which employees will take this leave.
Employers should consider introducing a policy on neonatal care leave and pay, as well as offering affected employees flexibility. Even if employees are not eligible for neonatal care leave, employers should be aware that they may qualify for statutory ‘time off for dependants’, or for ‘time off for carers’.
