EMPLOYMENT LAW DEVELOPMENTS

Pay and Wages

National minimum wage
From April 2025, the National Living Wage (payable to workers aged 21 and above) will go up by 6.7% from £11.44 to £12.21 an hour. This is worth an extra £1,400 per year for full-time workers. 
The National Minimum Wage will increase by 16.3% for 18- to 20-year-olds – from £8.60 to £10.00 an hour. This increase of £1.40 is the biggest on record for the National Minimum Wage and is the first step in the government’s pledge to align the National Minimum and National Living Wage over time, creating a single adult rate. 
The apprentice rate and the rate for those under 18 years old is also increasing. It will rise from £6.40 to £7.55 an hour which is an 18% increase.  

National Insurance contributions
The National Insurance (NI) rate paid by employers will rise by 1.2% from 13.8% to 15% by April 2025. Additionally, the threshold at which employers start paying NI on a worker’s earnings will be reduced from £9,100 a year to £5,000. 
To support smaller businesses, the employment allowance will be raised from £5,000 to £10,500. This change means that over 800,000 employers will not pay any NI next year, while over one million will pay the same or less than they did previously. 

Statutory rates
There are some modest increases in statutory payments which will take effect from April 2025: 
The weekly rate of Statutory Sick Pay will increase to £118.75 (currently £116.75)
The weekly rate of Statutory Maternity Pay, maternity allowance, Statutory Paternity Pay, Statutory Shared Parental Leave Pay, and Parental Bereavement Pay will be £187.18 (currently £184.03)
The lower earnings limit (the minimum amount an employee needs to earn each week to qualify for these payments, other than maternity allowance) will be £125 – an increase of £2 from the current rate. The lower earnings limit for maternity allowance will remain at £30 a week. 

Holiday and holiday pay
Following the amendment of the Working Time Regulations by The Employment Rights (Amendment, Revocation and Transitional Provisions) Regulations 2023, new rules apply to workers with irregular working hours (such as those engaged on zero-hour contracts) and part-year workers, with leave years on or after 1 April 2024. As many businesses will have a January to December leave year, this means that for some, these rules will only now be coming into effect. 
The new rules mean that irregular hours and part-year workers will accrue holiday at a rate of 12.07% of the hours they work, rather than automatically being entitled to 5.6 weeks holiday each year. Employers will also be able to lawfully roll-up holiday pay for this group of workers by paying an additional 12.07% on top of their hourly pay, provided they itemise this separately on their payslips. 

Collective consultation

Protective awards
In certain circumstances, employers are obliged to carry out collective consultation. If an organisation fails to comply with their collective consultation obligations, where relevant, then the tribunal may order them to pay a protective award of up to 90 days’ pay to each employee affected. 
From 20 January 2025, tribunals will be able to increase this protective award by up to 25% if the employer has unreasonably ignored a relevant Code of Practice (including the Code of Practice on Dismissal and Re-engagement). On the other hand, if the employee is the one who hasn’t followed the Code, their compensation can be reduced by up to 25%. 

Trigger to collectively consult
Currently, employers proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days or less must collectively consult with a recognised union or employee representatives before making anyone redundant. If they don’t employees can claim a protective award of up to 90 days’ pay. 
The Bill removes the words ‘at one establishment’ which means that employers will need to count any proposed redundancies across all of their sites or premises to work out if they need to embark on collective consultation. This change will come into effect once the Bill becomes law. 

Family Rights 

Neonatal care
The Neonatal Care (Leave and Pay) Act 2023 will enable parents whose newborn baby is admitted to neonatal care to take up to 12 weeks of paid leave, in addition to any other leave they are entitled to take. 
Further regulations are needed to implement the right which is expected to take effect from April 2025.

Paternity leave and bereavement
The Paternity Leave (Bereavement) Act 2024 will eliminate the requirement for fathers and partners to have worked for at least 26 weeks before being eligible to take paternity leave where the mother, or an individual with whom a child is placed or expected to be placed for adoption, has died in the first year after birth or adoption.  
The government has not said when they expect this new right to take effect, and again further regulations will be needed. 

Employment Rights Bill

General employment changes
The Employment Rights Bill was introduced to Parliament on 10 October 2024 and contains a significant number of proposed changes to employment law including the right to claim unfair dismissal from the first day of employment and reintroducing liability of employers for third party harassment. Most won’t come into force until 2026. But there are a few exceptions including changes to the trigger for collective consultation and repealing legislation relating to industrial action and trade unions. 
The government has already started to consult on a number of provisions in the Bill. More will follow. It places weight on the number of responses it receives from interest parties and we strongly recommend that you identify the proposals which are likely to have a significant detrimental impact on your organisation and clearly set out your concerns when the consultation lands. We’ll let you know when each new consultation is announced. 

Increase in compensation limits from April 2025
The limit on a ‘week’s pay’ and the various maximum employment tribunal awards will increase from 6 April 2025.
The Employment Rights (Increase of Limits) Order 2025 makes the following changes:
The maximum amount of a ‘week’s pay’ – used to calculate statutory redundancy pay and various other payments (e.g. the basic award for unfair dismissal) – increases from £700 to £719
The maximum compensatory award for unfair dismissal increases from £115,115 to £118,223 (the upper limit remains the lower of a year’s salary or the maximum statutory limit)
The minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons increases from £8,533 to £8,763
The limit on the compensatory award for a failure to have a written policy on allocating tips, or for a failure to allocate and pay tips fairly, will increase from £5,000 to £5,135
Statutory guarantee pay increases from £38 to £39 per day
The new rates apply where the event giving rise to compensation or payment occurs on or after 6 April 2025. For example, in the case of unfair dismissal the rates apply to all dismissals where the effective date of termination falls on or after this date. Where the dismissal or relevant event falls before 6 April, the old limits will still apply, irrespective of the date on which compensation is awarded.

Please contact The Pinnacle Partnership should you need guidance and specific advice on these or any employment legal related issues on 0330 323 0435 or by email – info@pinnaclepartnership.co.uk