We have set out below the new employment law rates in place from April 2025.
National living and minimum wage rates
From 1 April 2025, the national living and minimum wage rates will see significant increases:
- National Living Wage: For workers aged 21 or over, the rate will rise from £11.44 to £12.21, marking a 6.7% increase.
- Ages 18 to 20: The rate will increase from £8.60 to £10, a substantial 16.3% rise.
- Under 18 (no longer of compulsory school age): The rate will go up from £6.40 to £7.55, an 18% increase.
- Apprentices: For those under 19 or over 19 and in the first year of their current apprenticeship, the rate will also increase from £6.40 to £7.55, reflecting an 18% rise.
These changes are designed to ensure fair compensation for all workers and to keep pace with the cost of living.
Statutory family-related pay
From April 2025, there will be adjustments to statutory family-related pay:
- Weekly rate increase: Statutory maternity pay, maternity allowance, adoption pay, paternity pay, shared parental pay, and parental bereavement pay will increase from £184.30 to £187.18.
- Effective dates: These changes will take effect from 7 April 2025 for all statutory family-related payments, except for maternity allowance, which will increase from 11 April 2025.
- Lower earnings limit: The weekly amount of earnings that qualifies an employee for these payments (except for maternity allowance) will rise from £123 to £125. The lower earnings limit for maternity allowance will remain at £30.
These adjustments ensure that family-related statutory payments remain in line with inflation and the cost of living.
Statutory sick pay
Statutory sick pay will also see an increase from 6 April 2025:
- Weekly rate: The rate will change from £116.75 to £118.75.
This 1.7% increase aligns with the Consumer Price Index to September 2024, ensuring that statutory sick pay keeps pace with inflation.
National Insurance changes
There are notable changes to National Insurance contributions and thresholds:
- Employer contribution rates: These will increase from 13.8% to 15%.
- National Insurance threshold: The threshold will decrease from £9,100 to £5,000.
- Worker’s allowance: This will increase from £5,000 to £10,500.
These changes are aimed at balancing the contributions between employers and employees while providing additional support to workers.
Employment rights (increase of limits) order 2025
Several limits related to employment rights will be adjusted from 6 April 2025:
- Statutory redundancy pay: The cap on a week’s pay for redundancy calculations will increase from £700 to £719.
- Compensatory Award in Unfair Dismissal Claims: The limit will rise from £115,115 to £118,223.
- Statutory Guarantee Payment: This will increase from £38 to £39 per day.
These changes ensure that compensation and redundancy payments remain fair and reflective of current economic conditions.
Preparing for the changes
As can be seen from the above figures, the cost of employment is increasing. It is crucial for employers to prepare for these changes. We recommend reviewing your payroll systems and ensuring that all necessary adjustments are made to reflect the new rates.
At our firm, we are committed to providing you with trustworthy, progressive, and relatable advice. We understand the unique needs of our clients and are here to support you through these transitions. If you have any questions or need further assistance, please do not hesitate to reach out to us.
How can we help?
Debbie Coyne is a Partner in our Employment Law team.
For further information on the above subject, please contact Debbie or another member of the team on 0330 111 3131 or via our contact form.