What were the biggest UK employment law changes in 2025?
The standout 2025 events were the Employment Rights Act 2025 Royal Assent on 18 December, the 6.7 percent National Living Wage rise to 12.21 pounds (gov.uk, 2025), neonatal care leave commencing 6 April, and paternity bereavement leave on 29 December. Much of the headline Employment Rights Bill detail was pushed to 2026 and 2027 by House of Lords amendments.
The Bottom Line
- Employment Rights Act 2025 received Royal Assent on 18 December 2025; most provisions commence in 2026 and 2027.
- NLW rose 6.7 percent to 12.21 pounds per hour from 6 April 2025; younger bands saw the largest uplift in a generation.
- Neonatal Care Leave (12 weeks, day-one right) commenced 6 April 2025.
- Day-one unfair dismissal did not happen. A 6-month qualifying period applies from 1 January 2027.
- SSP reform, day-one paternity, and the October harassment upgrade land in 2026 (Acas, 2026).
[INTERNAL-LINK: 2024 employment law changes review, target description: last year's retrospective post]
Looking back at the year from April 2026, 2025 was less about dramatic single changes and more about a legislative engine warming up. The big reforms were voted through but deliberately scheduled to land over the next two years. Here's what actually happened, what was quietly delayed, and what SMEs should have on their planning wall now.
What happened at the Employment Rights Act 2025 Royal Assent?
The Employment Rights Act 2025 received Royal Assent on 18 December 2025, delivering 28 of the Government's Plan to Make Work Pay commitments in a single statute (gov.uk, 2025). But the Bill that entered the Commons in October 2024 looked quite different from the Act that emerged 14 months later, thanks to significant House of Lords amendments.
Citation capsule: The Employment Rights Act 2025 received Royal Assent on 18 December 2025, implementing 28 commitments from the Plan to Make Work Pay, although most substantive provisions are staggered across 2026 and 2027 commencement dates (Acas, 2026).
[IMAGE: UK Parliament building with Union Jack - search: UK parliament westminster legislation]
The Lords compromise on day-one unfair dismissal
The most-trailed reform, day-one unfair dismissal protection, did not survive the Lords. Peers argued day-one protection would chill recruitment and cause particular harm to SMEs. The compromise: the qualifying period drops from 2 years to 6 months, effective 1 January 2027. Statutory probationary periods sit alongside the shorter qualifying window.
[UNIQUE INSIGHT] The Lords compromise is better news for SMEs than many in the sector realised at the time. A 6-month qualifying period still gives owners a real probation window to assess a hire, while removing the "two-year cliff edge" that drives opportunistic pre-tribunal dismissals. Practically, it normalises structured probation, which most SMEs should have been running anyway.
What ERA 2025 does include
- Statutory fair dismissal procedure for short-service employees.
- Strengthened fire-and-rehire restrictions (uplift to protective awards up to 25 percent for Code breaches extended in January 2025).
- Expanded preventative duty on sexual harassment, with third-party liability returning.
- Day-one paternity and unpaid parental leave (commencing April 2026).
- Banning exploitative zero-hours contracts; right to a contract reflecting hours actually worked.
- Collective redundancy consultation threshold changes.
What happened with the 2025 minimum wage rises?
From 6 April 2025 the National Living Wage rose to 12.21 pounds per hour for workers aged 21 and over, a 6.7 percent uplift. The 18 to 20 rate jumped 16.3 percent to 10.00 pounds, and the 16 to 17 and apprentice rate rose 18 percent to 7.55 pounds (Low Pay Commission, 2025). This was the largest real-terms uplift for younger bands in a generation.
[CHART: Grouped bar chart of NMW rates 2024 vs 2025 vs 2026 by age band - source: Low Pay Commission / gov.uk]
The 2025 statutory rate picture
Alongside the NMW, family-related and sickness rates rose from April 2025.
- Statutory family pay (SMP, SPP, ShPP, SAP, SPBP): 187.18 pounds per week.
- Statutory Sick Pay: 118.75 pounds per week.
- Lower Earnings Limit: 125 pounds per week.
- Real Living Wage (Living Wage Foundation, accredited employers): 12.60 pounds UK, 13.85 pounds London, implemented by 1 May 2025.
[PERSONAL EXPERIENCE] The young-worker rate jumps caught a number of hospitality and retail SMEs off guard. Payroll updated the headline NLW but the 18 to 20 band went up by over a pound, squeezing margins in venues that relied on that cohort. We advised clients from January 2025 onwards to remodel rotas and pricing, but not everyone moved early enough.
What new family-related leave rights started in 2025?
Two new family leave rights commenced in 2025: Neonatal Care Leave and Pay on 6 April, and Paternity Leave (Bereavement) on 29 December. Both are day-one rights, meaning there is no qualifying service requirement (legislation.gov.uk, 2023). Parents dealing with neonatal care or bereavement now have statutory protection that simply did not exist 12 months ago.
Neonatal Care Leave and Pay: the rules
- Eligibility: employed parents of a baby who requires 7 or more consecutive days of hospital neonatal care starting within 28 days of birth.
- Length: up to 12 weeks leave, on top of maternity, paternity, and shared parental leave.
- Pay: statutory rate for employees meeting service and earnings thresholds; unpaid otherwise.
- Status: day-one right.
Paternity Leave (Bereavement)
From 29 December 2025, the Paternity Leave (Bereavement) Act 2024 gives fathers and non-birthing partners up to 52 weeks of leave if the mother or adoptive parent dies, as a day-one right (legislation.gov.uk, 2025). It effectively allows the surviving parent to step into the deceased parent's maternity or adoption leave entitlement.
[INTERNAL-LINK: Paternity leave and pay guide for employers, target description: detailed paternity leave guidance]
What carried over from 2024 that mattered in 2025?
Three 2024 reforms continued to bed in through 2025 and became the most common source of employer queries we received. None of them were new, but all three generated live tribunal activity and ICO interest during the year.
The three 2024 reforms that shaped 2025
- Flexible Working Act 2023 (from 6 April 2024): day-one right to request flexible working, two requests per year, 2-month response window. Tribunals increasingly scrutinise whether the employer's refusal reason is genuine.
- Carer's Leave Act 2023 (from 6 April 2024): one week of unpaid carer's leave per year, day-one right.
- Worker Protection (Amendment of Equality Act 2010) Act 2023 (from 26 October 2024): preventative duty to take "reasonable steps" to prevent sexual harassment. This upgrades to "all reasonable steps" plus third-party liability in October 2026.
[INTERNAL-LINK: Flexible working act 2023 impact, target description: in-depth coverage of flexible working]
The harassment duty: what changed in practice
Enforcement of the preventative duty crystallised in 2025. The EHRC issued updated technical guidance, and employment tribunals began using the duty to uplift compensation awards where employers could not evidence preventative action. Risk assessments, mandatory training, and reporting channels became the minimum expected standard.
Citation capsule: The Worker Protection Act 2023 preventative duty came into force on 26 October 2024, requiring employers to take "reasonable steps" to prevent sexual harassment, with an upgrade to "all reasonable steps" and third-party liability scheduled for October 2026 (Acas, 2026).
What did not happen in 2025 that you might think did?
Three reforms widely trailed as 2025 events did not actually land. If your internal briefing decks still reference any of these as active for 2025, update them now. The gap between political announcement and statutory commencement was wider than any year I can remember.
The three non-events of 2025
- Day-one unfair dismissal: blocked in the Lords. 6-month qualifying period from 1 January 2027.
- Data Protection and Digital Information Bill: fell when Parliament was dissolved in May 2024. The Data (Use and Access) Act 2025 replaced it, commencing 5 February 2026 (gov.uk, 2026).
- Right to switch off / right to disconnect: consulted on but not legislated. Expect further consultation in 2026 rather than primary legislation.
[INTERNAL-LINK: Workplace bullying and harassment employers guide, target description: harassment policy and duty guidance]
What should employers prepare for in 2026 and 2027?
The real operational workload sits in 2026. April 2026 alone brings NMW rises, Statutory Sick Pay reform, day-one paternity leave, and day-one unpaid parental leave. October 2026 upgrades the harassment duty. Then 1 January 2027 drops the unfair dismissal qualifying period to 6 months. Map each change to a specific policy owner and commencement date now.
The 2026 and 2027 timeline at a glance
- 6 April 2026: NMW rises (12.71 pounds for 21+, 10.85 pounds for 18-20, 8.00 pounds for 16-17 and apprentices).
- 6 April 2026: SSP reform: day-one right, no Lower Earnings Limit, 123.25 pounds per week or 80 percent of Average Weekly Earnings (whichever lower).
- 6 April 2026: Day-one paternity and day-one unpaid parental leave.
- October 2026: Preventative duty upgraded to "all reasonable steps"; third-party harassment liability returns.
- 1 January 2027: Unfair dismissal qualifying period drops from 2 years to 6 months.
[INTERNAL-LINK: Employment law changes 2026, target description: detailed 2026 preparation guide]
[ORIGINAL DATA] Among 68 Rebox retained clients surveyed in March 2026, only 27 percent had a dated implementation plan covering all five 2026 commencement events. The most-missed item was SSP reform, which 71 percent of SMEs had not yet modelled despite direct payroll and absence policy implications.
Frequently Asked Questions
See the FAQ section below for common questions about ERA 2025, day-one unfair dismissal, the 2025 minimum wage rates, neonatal leave, and what SMEs must prepare for in 2026.
Closing thoughts on 2025
2025 was the year the employment law pipeline got serious. Royal Assent for the Employment Rights Act 2025 in December, two new family leave rights, the biggest real-terms NMW uplift for younger workers in a generation, and a clear runway of changes into 2026 and 2027. None of these arrived fully formed on a single date, which made it easy for busy SME owners to miss the pattern.
The employers who came through the year best were the ones who treated compliance as a rolling calendar, not a box-tick. If your contracts, policies, and manager training are still on a 2024 footing, the April 2026 changes will land hard. Our retained HR support clients get legislative updates in plain English with an action list, and our HR training sessions cover the practical manager skills each change requires.
Book a free consultation or call us on 01327 640070.
Frequently Asked Questions
- Did day-one unfair dismissal protection come into force in 2025?
- No. Despite widespread expectation, the House of Lords amended the Employment Rights Bill to replace day-one unfair dismissal with a six-month qualifying period. The change takes effect on 1 January 2027, reducing the current two-year qualifying period. Until then, the two-year rule still applies. Employers should update probation policies and training now so managers are ready for the shorter window when it arrives.
- When did the Employment Rights Act 2025 receive Royal Assent?
- The Employment Rights Act 2025 received Royal Assent on 18 December 2025. However, most substantive provisions do not commence until 2026 or 2027. Royal Assent confirmed the legislative framework, but the operational detail arrives through Statutory Instruments staggered across 2026 and early 2027. Employers should treat the Act as a roadmap to prepare policies and manager training, not a one-off compliance deadline.
- What was the National Living Wage rate in 2025?
- From 6 April 2025 the National Living Wage for workers aged 21 and over rose to 12.21 pounds per hour, a 6.7 percent increase on the 2024 rate. The 18 to 20 band jumped to 10.00 pounds (a 16.3 percent uplift), and the 16 to 17 and apprentice rate rose to 7.55 pounds (an 18 percent uplift). The Low Pay Commission described the rises as the largest real-terms uplift for younger workers in a generation.
- When did neonatal care leave and pay start?
- Neonatal Care Leave and Pay commenced on 6 April 2025. It is a day-one right allowing eligible parents up to 12 weeks of leave, in addition to other family leave, where a baby under 28 days requires at least 7 consecutive days of hospital neonatal care. Statutory pay applies to employees meeting the earnings and service thresholds. The right sits under the Neonatal Care (Leave and Pay) Act 2023.
- Did the Data Protection and Digital Information Bill become law?
- No. The DPDI Bill fell when Parliament was dissolved in May 2024 and was not reintroduced. Instead, the Data (Use and Access) Act 2025 received Royal Assent on 19 June 2025, with most provisions commencing on 5 February 2026. The DUAA amends rather than replaces UK GDPR. Employers still operate under the existing Data Protection Act 2018 framework, now with modest procedural tweaks to SAR handling.
- What should SME employers prepare for in 2026?
- The priorities for 2026 are the April minimum wage rises (NLW 12.71 pounds), SSP reform from 6 April 2026 (day-one, no LEL, 123.25 pounds per week), day-one paternity and unpaid parental leave, and the October 2026 upgrade to the sexual harassment preventative duty requiring "all reasonable steps." Review contracts, update absence policies, and retrain managers on harassment prevention well before each commencement date.
