As we approach April 2025, the annual uplift to statutory minimum wage, statutory rate limits, and family-related leave, take effect. These changes will take particular importance to employers with the commencement of the increase in employer National Insurance Contributions from 6 April 2025, and those businesses currently planning redundancies in the coming weeks and months.
April 2025 will also be of significance with the commencement of new rights statutory for parents to take paid neonatal care leave.
National Living Wage and National Minimum Wage Increases
Effective from April 1, 2025, the UK government will implement the following national minimum wage increases:
- The National Living Wage (NLW) for workers aged 21 and over will rise from £11.44 to £12.21 per hour.
- The National Minimum Wage (NMW) for 18 to 20-year-olds will increase from £8.60 to £10.00 per hour.
- The NMW for 16 to 17-year-olds will rise from £6.40 to £7.55 per hour.
- The NMW for apprentices will also increase from £6.40 to £7.55 per hour.
Notably, 5 years ago, the NLW rate was confined to workers aged 25 or over, and was set at £8.72. The NLW has since then expanded to workers aged 21 or over, and will now increase to £12.21, being a 40% increase since April 2020, and represents a significant growth in wage bills for employers of workers on minimum wage rates.
Statutory Sick Pay
From April 2025, Statutory Sick Pay (SSP) will increase from £116.75 to £118.75 per week. Similarly, the lower earnings threshold to qualify for SSP will rise to £125.00 per week, aligning with the increases for other statutory family-related payments. SSP currently requires an absence of at least 3 days (known as waiting days) before it becomes payable, and is payable for a maximum of 28 weeks, however the Government is currently planning to remove the requirement for the waiting day period, and increase SSP to be 80% of a worker’s pay for those earning below the lower earnings limit.
Statutory Awards and Payments
The Employment Rights (Increase of Limits) Order 2025 has been laid before Parliament, outlining increases to statutory limits and awards for employment tribunals. If approved, these changes will come into effect for terminations of employment taking effect from 6th April 2025:
- Statutory redundancy pay: the cap on a week’s pay used for calculating statutory redundancy payments will rise from £700 to £719.
- Compensatory awards for unfair dismissal: the maximum limit on compensatory awards for unfair dismissal will increase from £115,115 to £118,223.
- Statutory guarantee pay: the daily rate for statutory guarantee pay will increase from £38 to £39 per day.
Employers already planning reorganisation and restructuring projects therefore need to bear in mind these increased rates in calculating redundancy costs and potential exposures for unfair dismissal claims.
Family-related leave
Under the Neonatal Care (Leave and Pay) Act 2023, employees will be entitled to statutory neonatal care leave and pay starting 6 April 2025. This new right is designed to support parents whose babies require specialist neonatal care for at least seven days following birth.
Eligible employees will be entitled to 12 weeks of statutory neonatal care leave, with a maximum pay of £187.18 per week. This will be granted in addition to existing maternity, paternity, adoption, and shared parental leave entitlements. Notably, the right to neonatal care leave will be available from day one of employment, meaning employees will not need to complete a minimum period of service to qualify.
In addition, from 6 April 2025, the rate for Statutory Maternity Leave (SML), Statutory Paternity Leave (SPL), Statutory Adoption Leave (SAL), Statutory Shared Parental Pay and Statutory Parental Bereavement Pay will also all increase from £184.03 to £187.18 per week.
Government Consultation on Ethnicity and Disability Pay Reporting
As steps to implement the wide ranging reforms proposed by the Labour Government continue, a government consultation has been launched on ethnicity and disability pay reporting as part of a broader effort to improve workplace equality. Following the King’s Speech in July 2024, the government plans to introduce the Equality (Race and Disability) Bill, requiring large employers (those with 250 or more employees) to report on ethnicity and disability pay gaps, like the existing gender pay gap reporting obligations.
This consultation will gather views on how to implement the new requirements. The consultation is open until 10 June 2025.
Next Steps for Employers
Employers must be proactive in preparing for these significant rate increases set to take effect from April 2025. These updates affect minimum wage rates, statutory pay, and redundancy payments, presenting challenges in workforce management and compliance.
To stay ahead, employers should:
- Review payroll and benefits systems: ensure your payroll system can accommodate the new wage rates and statutory pay updates, and ensure all workers continue to receive pay in accordance with the NLW and NMW.
- Update employment contracts and policies: revisit employment contracts, especially regarding redundancy terms and dismissal procedures, and ensure family leave policies reflect the new entitlements to neonatal care leave.
- Communicate changes to employees: make sure employees are informed of their new entitlements and the changes to their pay.
The proposed new pay gap reporting obligations mean employers need to take preparatory steps now to be clear about pay gaps based on ethnicity and disability, in addition to gender. Large companies will need to make sure their payroll systems and data collection processes can capture and report this information correctly.
Employers will also need to share data about the ethnicity and disability makeup of their workforce. This will help highlight how well different groups are represented in the workplace. This move is part of a wider effort to push businesses towards greater accountability in improving diversity, equity, and inclusion (DEI).
How can we help?
For further information about issues raised in this article, please contact a member of our employment team.
