Business and Employment Law in 2025

So here we are – it’s 2025, the UK’s legal landscape for business and employment is undergoing significant changes.

For business leaders, owners, and managers, staying ahead of these updates is crucial for compliance, workforce satisfaction, and long-term growth. 

At Allington Hughes we make it our priority to help our clients stay a step ahead and support them with their businesses through practical legal advice. 

Here’s an overview of the most important changes to watch out for in 2025 and how they might impact your organisation.

1. Employment Rights Bill: 

The much-anticipated Employment Rights Bill represents a landmark shift in employment law. While many of its provisions will fully take effect in 2026, 2025 is a critical year for preparation. Key changes include:

• Unfair Dismissal protections
  Employees will gain unfair dismissal protections from day one of employment, removing the current qualifying period. . It is anticipated there will be a newly termed “initial period of employment” of 9 months where employers can still dismiss employees for certain employment matters and there is likely to be a new “light touch” disciplinary procedure that will apply during the initial period. The new rights will give employees greater security and employers less flexibility in some cases.
• Zero-Hour contracts
  Significant for some sectors more than others, the bill aims to curb exploitative zero-hour contracts. The flexibility your business may have found with this will change with workers who demonstrate regular hours over a defined period having the right to request guaranteed-hours contracts.
• Flexible Working as standard
  Flexible working will become the default unless employers can demonstrate valid reasons otherwise. This shift is likely to transform workplace culture and employee expectations.
• Crackdown on fire and rehire practices
  Practices involving firing employees and reoffering roles under less favourable terms will face much stricter regulations. Unless the business is likely to completely fail without the change being enforced, it will be deemed unfair

The Allington Hughes recommended action point: Begin reviewing contracts and workplace policies now to ensure compliance and adaptability to these changes.

2. National Minimum wage hike: 

From April 2025, millions of workers will see significant wage increases meaning that businesses need to start reviewing their payrolls now:

• Over 21s: A 6.7% rise to £12.21 per hour
• Ages 18–20: A 16.3% increase to £10.00 per hour
• Ages 16–17 and apprentices: An 18% increase to £7.55 per hour

While great news for employees, this poses a challenge for businesses managing tight margins.

The Allington Hughes recommended action point: Review your payroll budget with a qualified accountant and consider how to offset rising costs through increased productivity, operational efficiencies, or pricing adjustments.

3. National Insurance contribution changes: 

Most are already aware and preparing for the higher costs incurred through the announcements made in the Autumn budget. 

Employers’ National Insurance contributions on salaries above £5,000 will rise to 15% in 2025, as part of broader government efforts to raise £40 billion in taxes. This increase will impact businesses of all sizes.

The Allington Hughes recommended action point: Factor this into your financial planning and explore strategies to manage the added cost, such as streamlining operations or reviewing workforce structures.

4. Worker Protection Against Sexual Harassment

The Worker Protection Act, effective from October 2024, introduced a proactive duty for employers to prevent sexual harassment, including by third parties. Employers will be expected to take reasonable steps to ensure a safe and inclusive workplace.

The Allington Hughes recommended action point: Conduct staff training, update your employment handbook, review workplace policies, and establish clear reporting mechanisms to comply with these obligations.

5. Fair allocation of tips: 

The Employment (Allocation of Tips) Act, effective October 2024, ensures that tips, gratuities, and service charges are allocated fairly to workers. If your business relies on tipping, this is a critical change.

The Allington Hughes recommended action point: Implement transparent systems for tip distribution and communicate these clearly to staff through your employment handbook and other policy documents. 

6. Retained EU Law Reform: 

With the Retained EU Law (Revocation and Reform) Act 2023 now in effect, various EU-derived employment laws will be adjusted or repealed. Employers should be prepared for changes in areas like working time regulations and agency worker rights.

The Allington Hughes recommended action point: Stay informed about upcoming reforms and work with legal experts to update your policies.

7. Enhanced parental and bereavement leave

The Employment Rights Bill also introduces parental and bereavement leave from day one of employment, reflecting the government’s commitment to employee well-being.

The Allington Hughes recommended action point: Update your employee handbooks to reflect these changes and consider how enhanced leave policies can support talent retention.

8. Trade Union strengthening

The bill also proposes lifting certain restrictions on trade unions, including rules around service levels during strikes. This could lead to greater union activity across industries.

The Allington Hughes recommended action point:: Build positive relationships with unions and consider proactive engagement to mitigate potential disruptions.

What these changes mean for business leaders

The updates in business and employment law reflect a clear shift towards enhanced worker protections and rights. While these changes will improve working conditions for many, they also bring new challenges for employers, particularly around compliance, cost management, and operational flexibility.

To navigate these changes effectively:

1. Stay informed: Regularly review updates and guidance from trusted legal and HR sources.
2. Engage your team: Communicate with your employees about how these changes will affect them and your organisation.
3. Seek expert advice: Work with HR and legal professionals to review contracts, policies, and workplace practices.

By taking a proactive approach, business leaders can turn these changes into opportunities to strengthen their workplace culture, improve employee satisfaction, and ensure long-term sustainability.

Get in touch with our team today on E: [email protected]

Get in touch with our team today

E: [email protected]

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