New Year, New Laws: What Small Businesses Must Know About HR Compliance in 2025
Ah, the New Year—a time for resolutions, fresh starts, and, if you’re a business owner, grappling with a slew of new HR regulations. Before you dive into 2025 with plans to boost profits or finally tackle that filing cabinet (we’ve all been there), it’s essential to get your HR house in order. Staying compliant isn’t just about ticking boxes; it’s about protecting your business, your employees, and your sanity. So, while there is list longer than Santa’s naughty list for the proposed legislation changes, here’s a breakdown of some of the headliners:
1. National Minimum Wage Increases
Starting April 2025, the National Minimum Wage and National Living Wage rates are set to rise. If you’re not paying close attention, your payroll could slip into illegal territory faster than you can say “HMRC audit.”
Here’s what you need to do:
Check the new rates: Ensure you’re paying staff the correct amount based on their age and employment category.
Update payroll systems: Automate these changes to avoid human error (and headaches).
2. National Insurance Increases
In the Autumn 2024 Budget, the Government announced significant National Insurance changes for employers:
Employer National Insurance contributions will rise from 13.8% to 15%
The threshold at which payments apply will also reduce from £9,100 per annum to £5,000
The Employment Allowance will be increased from £5,000 to £10,500
The first two of these changes amount to a significant National Insurance increase for employers. The Employment Allowance rise will help to mitigate some of this damage, particularly for the smallest businesses.
How to stay compliant:
Prepare budgets and tax processes to account for the changes to Class 1 National Insurance that will apply from April 2025.
3. The "Right to Disconnect" Is Gaining Momentum
While not yet a legal requirement, the concept of a "right to disconnect" is making waves in 2025. There is a push for greater boundaries between work and personal life, and some sectors are adopting formal policies. It has been indicated that the right to switch off could be introduced in the form of a code of conduct with potential tribunal uplift for non-compliance with the code.
How to prepare:
Assess your communication culture—are after-hours emails a norm?
Consider implementing a policy that encourages work-life balance. Happier employees are often more productive ones.
4. Increased Focus on Harassment and Discrimination
We had the new legislation last year on sexual harassment – in 2025 we are expecting a new provision requiring employers to not permit harassment from a third party (such as a client or customer).
Steps to take:
When the necessary detail is available:
Review and update your anti-harassment and anti-bullying policies.
Provide regular training to employees and managers on recognising and preventing harassment.
Create clear reporting mechanisms for incidents.
5. Statutory Sick Pay will have a makeover
We don’t have any confirmed dates for any changes as yet, but the proposals are:
To make Statutory Sick Pay (SSP) a right from day one of illness (rather than day four) and from the start of employment.
Removing the lower earnings limit band.
Stay on top by:
Briefing managers and employees on the changes as they happen
Check relevant policies, documents and processes such as attendance or absence policies, contracts of employment, and any forms such as return to work forms
Engage any external providers, such as payroll providers.
Action points:
Update your policies to reflect these changes.
Ensure managers understand the updates to avoid potential discrimination claims.
How to Stay Ahead in 2025
Feeling overwhelmed? You’re not alone. HR compliance can feel like a maze, but it doesn’t have to be. Here are some quick tips:
Stay informed: Bookmark government and industry websites to stay updated.
Invest in expert advice: Partner with an HR consultant (ahem!) to ensure you’re compliant without the stress.
Leverage technology: HR software can automate compliance tasks, saving you time and reducing errors.
A New Year’s Resolution Worth Keeping
Getting your HR compliance sorted in 2025 isn’t just about avoiding fines or tribunals. It’s about creating a workplace where employees thrive and your business prospers. So, while you’re setting your goals for the year, add this one to the top of the list:
"Make HR compliance a breeze."
Your future self (and your employees) will thank you.
Human Everything have an exclusive HR Membership for small businesses that will help you keep on top of any employment law changes as they happen. Find out more by getting in touch with Lucy: lucy@humaneverything.co.uk