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Are You Ready for Upcoming Changes to Employment Law?

​The landscape of UK employment law is evolving rapidly, with significant reforms on the horizon that could affect your business’s payroll, policies, and operational planning. From an increase in National Insurance contributions to sweeping changes introduced by the Employment Rights Bill, now is the time to prepare. Let’s explore these key changes, what they mean for your business, and the steps you can take to stay compliant and competitive. ​Key Changes on the Horizon Rising National Insurance Contributions Following the initial announcement in the 2024 Autumn Budget, a key reform is the scheduled increase in employers’ National Insurance (NI) contributions. Effective from April 2025, the NI rate will rise from 13.8% to 15%, while the threshold for liability will drop from £9,100 to £5,000 per annum. This change is expected to significantly increase business costs nationwide, with government estimates indicating it could generate an additional £25 billion annually to support public services and economic stability. (Source). These adjustments not only increase your payroll expenses but also necessitate a review of your cost structures and pricing strategies—especially if you operate in sectors with large numbers of low-wage workers. ​The Employment Rights Bill: What’s Changing? The Employment Rights Bill promises to be one of the most radical overhauls in recent decades, aiming to enhance workers’ rights significantly. Key proposals include: Day-One Unfair Dismissal Protection: Workers could gain the right to claim unfair dismissal from day one, although employers might still impose a probation period of up to nine months with a simplified dismissal process. Ban on Exploitative Practices: The Bill seeks to restrict practices such as “fire and rehire” and abusive zero‐hours contracts, ensuring employees have a more predictable and secure working environment. Enhanced Statutory Rights: Employees may soon enjoy day‐one access to statutory sick pay, parental leave, and flexible working requests, with improved protections against discriminatory practices. While many of these changes may not be implemented until 2026, it is essential to begin preparing now by reviewing your employment contracts and HR policies (Source). ​Preparing Your Business for Change In anticipation of these changes, here are some practical strategies to help you prepare:Review and Update HR PoliciesStart by auditing your current employment contracts and internal policies. Look for areas that might conflict with the new statutory rights—for example, your dismissal procedures, flexible working arrangements, and provisions in zero‐hours contracts. Updating these documents can help you avoid compliance issues when the changes come into force. Review And Refine Your Compensation StrategyFurther to the above, ensure that your compensation packages remain competitive even as wage floors increase. Consider non-monetary benefits—such as comprehensive health and wellbeing programmes and initiatives to foster a positive company culture—to help attract and retain staff.Update Payroll SystemsEnsure that your payroll software is equipped to handle the upcoming changes in NI rates and thresholds, as well as the increased National Minimum Wage rates. For instance, from April 2025, the National Living Wage for workers aged 21 and over will rise from £11.44 to £12.21 per hour, while other age bands will see similarly significant increases. A timely update to your systems can help prevent calculation errors and reduce the risk of penalties.Engage with Legal and HR ExpertsGiven the complexity of the upcoming reforms, it might be wise to consult with legal experts who specialise in employment law. They can offer tailored advice on navigating changes in the Employment Rights Bill, ensuring your business stays compliant and can capitalise on new opportunities.Communicate with Your WorkforceChanges to employment law can significantly impact employee expectations and morale. Transparent communication about how these changes might affect their rights and your business policies can help maintain trust and improve overall workplace satisfaction.Plan For Potential Hiring ChallengesWith wage increases and added administrative burdens, some companies may face recruitment slowdowns. Adjust your hiring strategies to focus on retaining existing talent and attracting high-calibre candidates through enhanced benefits, career development opportunities, and a clear vision for how your company adapts to change.​Impact on Business Costs and Operations The cumulative effect of increased NI contributions and revised wage rates mean that many employers should expect a tangible rise in overall employment costs. While some of these costs may be passed on to employees through adjusted wage structures, businesses must carefully manage their operational budgets to maintain competitiveness. Investing in training and technology—such as more efficient payroll systems or digital HR management tools—could help offset some of these costs. Moreover, by creating a stable work environment that offers consistent job security, companies can improve employee retention, reduce turnover expenses, and boost productivity over the long term. ​Stay Informed and Get the Support You Need Keeping abreast of legislative updates is crucial. With ongoing consultations on the Employment Rights Bill and other reforms, changes may evolve over the coming months. By staying informed and engaging proactively with industry experts, you can position your business to adapt swiftly to new legal obligations. If you need further guidance on how these upcoming changes might affect your business or require assistance in updating your policies and systems, our team at Thrive is here to help. Get in touch for tailored advice and support to navigate these changes clearly and confidently.