Payroll and workforce changes you should be aware of in 2025

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As we move through 2025, the UK’s employment and payroll landscape is continuing to evolve at pace. From major employment law reforms to enforcement of off-payroll rules and changes in wage legislation, staying on top of compliance is critical for any organisation.

Here’s your essential mid-year summary of the most relevant updates – so you can stay informed, proactive, and ahead of risk.

Employment Rights Bill: Day-One Flexibility and Greater Protections

The updated Employment Rights Bill is one of the most notable developments so far this year. It brings increased protections for employees while also giving employers clear new obligations.

Key changes include:

Coming in 2025

Right to Request Predictable Working Patterns (September 2025)
Workers and agency staff on variable or zero-hours contracts will be entitled to request a more predictable work schedule after 26 weeks of service.
This includes:

  • More stable hours
  • Predictable shift patterns
  • Greater scheduling certainty

Introduction of Unpaid Carer’s Leave
Employees will have the right to one week of unpaid leave per year to care for a dependent with long-term care needs.

  • Available from day one of employment
  • Can be taken flexibly in full or half days

From April 2026

  • Protective Awards in Collective Redundancies: The maximum protective award will be doubled, offering more financial security during mass redundancy events.
  • Day-One Eligibility for Paternity Leave and Unpaid Parental Leave: No qualifying period required.
  • Whistleblowing Protections Strengthened: Better safeguarding for those reporting wrongdoing.
  • Fair Work Agency Established: A new enforcement body to promote fair treatment and uphold labour rights.
  • Statutory Sick Pay Reforms: Removal of the lower earnings limit and waiting period, making sick pay accessible to all workers.
  • Trade Union Measures (1st Package): New rights and protections for trade union representatives.

From October 2026

  • Ban on “Fire and Rehire” Practices: Ending exploitative tactics that pressure workers into worse terms.
  • Fair Pay Agreement Body for Adult Social Care (England): Industry-wide minimum standards to be negotiated and enforced.
  • Tipping Law Reform: Ensuring fairer and more transparent allocation of tips and service charges.
  • Employer Duty to Prevent Sexual Harassment: Businesses must take “all reasonable steps” to prevent harassment.
  • Third-Party Harassment Protections: Employers will be liable if harassment by clients, customers, or others isn’t addressed.
  • Trade Union Measures (2nd Package):
    • Strengthened union rep rights
    • Extended protection from detriment during industrial action
    • Broader union access rights in workplaces

From 2027

  • Voluntary Gender Pay Gap & Menopause Action Plans (launched in April 2026, with growing emphasis on implementation)
  • Enhanced Dismissal Protection for Pregnant Workers and New Mothers
  • Further Sexual Harassment Guidance: Clarifying what qualifies as “reasonable steps” for employers
  • New Bereavement Leave: Statutory time off to grieve, offering job protection during difficult periods
  • Ban on Exploitative Zero-Hours Contracts
  • Day-One Right to Protection from Unfair Dismissal
  • Improved Access to Flexible Working: Ongoing reforms to make flexibility the default option in more sectors

What employers need to do: Review employment contracts, update HR policies, and ensure your line managers are fully briefed on these changes.

Holiday Pay Reform: Rolled-Up Pay is Back (for Some)

One of the most employer-relevant changes in 2025 is the return of rolled-up holiday pay – but only in specific circumstances.

As of this year, rolled-up holiday pay is legally permitted for:

  • Irregular-hours workers
  • Part-year workers

Employers can include a 12.07% holiday pay uplift within regular wages, provided it’s clearly itemised on payslips.

This change offers welcome simplicity, especially for businesses with seasonal, casual, or gig economy staff. However, transparency is key, and contracts should be clear that this method is being used.

Gender Pay Gap Reporting: Don’t Miss the Mark

For employers with 250 or more employees, the gender pay gap reporting deadline (4 April 2025) may be behind us – but it’s not the time to go quiet.

There’s growing pressure on employers to not only report figures, but to include a narrative and action plan that explains how they’re working to close the gap.

If your business falls into the threshold, this is a perfect time to:

  • Review your internal reporting
  • Evaluate the impact of your action plan
  • Communicate progress to employees and stakeholders

Transparency is becoming the benchmark – and it helps attract and retain talent.

What Employers Should Be Doing Now

With so many employment and payroll regulations shifting in 2025, it’s crucial to:

  • Ensure payroll software and systems reflect the latest legal pay rates
  • Revisit employment contracts and onboarding policies
  • Train HR and payroll teams on flexible working and holiday pay changes, or look for outsourced service providers.
  • Communicate clearly with staff about what these changes mean for them

At Nicholsons, we work with businesses of all sizes to keep payroll smooth, compliant, and stress-free. If you’re unsure whether your current practices are up to date, now’s the time to act.

Posted in Blog, Payroll.