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HR Changes in 2025: An Essential Guide for UK Small Businesses & SMEs Navigating Employment Law Updates

Writer's picture: Joanna BreenJoanna Breen

The Hidden Dangers of Running a Business without HR Support - Breen & Associates - Results Through People



As we embark on 2025, a series of significant HR changes and employment law updates are set to impact UK small businesses and SMEs. From Day-One Employment Rights to the introduction of the Right to Disconnect, these legislative changes reflect a broader push to foster fair, flexible and healthy workplaces.


If all this sounds overwhelming, you’re not alone. Staying on top of these updates can feel like a full-time job – especially when you’re already juggling day-to-day operations. However, with the right information and a proactive approach, you can turn these legal changes into an opportunity to enhance employee satisfaction, reduce turnover and future-proof your business.


In this blog post, we’ll dive into each upcoming 2025 HR legal changes, outlining the details you need to know and offering practical tips for smooth implementation. You’ll walk away with clarity, confidence and a roadmap to help keep your business both compliant and competitive.



1. Day-One Employment Rights: Immediate Entitlements for New Starters


One of the most headline-grabbing changes for 2025 is the move toward immediate statutory rights. Previously, employees needed a qualifying period (often six months) before gaining access to certain benefits, such as the right to request flexible working.


What’s Changing in Detail?


  • Instant Access: New hires are entitled to certain rights – like requesting flexible working – from their first day on the job.

  • Greater Inclusivity: The shift aims to promote fairness and make workplaces more adaptable to modern life, especially where caring responsibilities or personal circumstances come into play.


How to Prepare


  • Review Employee Contracts: Ensure all employment contracts and offer letters reflect these day-one entitlements.

  • Train Your Management Team: Provide guidance on how to handle flexible working requests effectively and empathetically.



2. Tighter Regulation of Zero-Hours Contracts


Zero-hours contracts have long been a hot-button issue. The 2025 HR changes introduce tighter control to protect workers from unpredictability, while still allowing flexibility where it’s truly needed.


What’s Changing in Detail?


  • Fair Scheduling Rules: Employers are now obliged to give reasonable notice of shifts and may face restrictions on last-minute cancellations.

  • Minimum Hours: If you regularly provide certain hours to the same worker, you may be required to formalise this with a minimum-hours contract.


How to Prepare


  • Audit Current Practices: Check existing zero-hours arrangements to ensure they align with updated legislation.

  • Implement or Update Scheduling Tools: Use reliable systems to manage shifts, reducing confusion and compliance risks.



3. Enhanced Family Leave: Including Neonatal Provisions


Family leave is expanding to include neonatal leave, offering extended support for parents facing hospital stays for their newborns. This adds another layer to maternity, paternity and shared parental leave regulations.


What’s Changing in Detail?


  • Neonatal Leave: Parents can take additional paid time off if their baby requires hospital care shortly after birth.

  • Longer Paternity Leave: Expect potential increases in the duration of paternity leave, offering more bonding time for new fathers or partners.


How to Prepare


  • Update Your Handbook: Clearly outline who qualifies for neonatal leave, the process for requesting it and the pay entitlements.

  • Supportive Culture: Communicate these changes in a positive, empathetic manner, so employees feel comfortable coming forward during challenging family circumstances.



4. Ban on ‘Fire and Rehire’ Practices


‘Fire and rehire’ – terminating contracts and rehiring employees on less favourable terms – has been heavily criticised. The 2025 ban aims to protect workers from drastic changes without proper negotiation and justification.


What’s Changing in Detail?


  • Stricter Regulations: You must demonstrate a clear, business-critical reason for changing employee contracts, alongside thorough consultation.

  • Legal Risks: Breaking these rules can result in employment tribunal claims and reputational damage.


How to Prepare


  • Transparent Restructuring: If you need to make contractual changes, consult employees early and explain the rationale thoroughly.

  • Seek Professional Advice: Complex restructures can be risky; expert legal or HR support is invaluable here.



5. Introduction of the Right to Disconnect


With remote and hybrid work on the rise, ‘always-on’ culture has become a concern. The new Right to Disconnect supports employee well-being by ensuring they have the freedom to log off without fear of repercussions.


What’s Changing in Detail?


  • Clear Boundaries: Employees should not be penalized for ignoring work communications outside their agreed working hours.

  • Best Practices: Employers are encouraged to avoid sending out-of-hours messages or, at minimum, clarify that no immediate response is required.


How to Prepare


  • Set Communication Policies: Outline in writing when staff should (or shouldn’t) check emails or messages.

  • Promote Work-Life Balance: Use scheduling tools to delay email sends and encourage managers to respect off-hours for their teams.



6. Strengthened Sexual Harassment Protections (Worker Protection Act 2024)


Following the Worker Protection Act 2024, the government is reinforcing measures to prevent sexual harassment in the workplace, including protection from third-party harassment.


What’s Changing in Detail?


  • All Reasonable Steps: Employers must prove they have comprehensive policies, regular training and effective reporting mechanisms in place to prevent harassment.

  • Extended Liability: If an employee is harassed by a client, vendor, or other third party, the onus is on the employer to address it properly.


How to Prepare


  • Policy Overhaul: Revisit your anti-harassment and bullying policies to ensure they meet the new standards.

  • Regular Staff Training: Short, interactive sessions help employees recognise unacceptable behaviour and understand how to report it safely.



7. National Minimum Wage and Living Wage Increases


Economic pressures are driving up the National Minimum Wage and National Living Wage, impacting labour-intensive industries most of all.


What’s Changing in Detail?


From April 2025, the National Living Wage (NLW) will rise to £12.21 per hour for workers aged 23 and over. This is a significant increase from the current rate of £11.44 per hour. Other rates include:


  • 21-22-year-olds: £12.21 per hour (aligned with NLW).

  • 18-20-year-olds: £10.00 per hour.

  • 16-17-year-olds and Apprentices: £7.55 per hour.


These changes will directly impact payroll budgets for small businesses and SMEs, particularly those with a large proportion of minimum-wage employees.


How to Prepare


  • Future-Proof Your Budgets: Factor in potential annual increases rather than waiting for official announcements.

  • Review Overall Pay Structures: If certain roles become too close in compensation, consider incremental raises or enhanced benefits for more senior positions.



Practical Tips for a Smooth Transition


  1. Centralise and Update Policies: Consolidate your HR policies – from zero-hours regulations to family leave – into one easily accessible handbook. This helps staff quickly find answers and ensures nothing is overlooked.

  2. Train Managers and Team Leads: Empower your management team with up-to-date knowledge of these new rules. They’re often the first point of contact for employee questions and will need to handle requests or concerns effectively.

  3. Encourage Open Dialogue: Regular team meetings, pulse surveys and anonymous feedback mechanisms can highlight potential policy gaps and maintain employee engagement.

  4. Explore HR Tech Solutions: Tools that automate leave requests, shift scheduling and policy updates can help you stay on top of compliance with less administrative strain.







Keep your HR on Track – Protect Your Business and Drive Growth


We specialise in helping UK small businesses & SMEs navigate the ever-changing landscape of employment law and HR compliance. We know how challenging it can be to manage HR alongside running a successful business.


Don't expose your business to risk that could lead to costly legal disputes, high employee turnover and compliance breaches that bring on hefty fines. Our Outsourced HR Services are an affordable, effective way to navigate complex employment law legislation, create thriving workplaces and plan for sustainable business growth.


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Discover how to improve legal compliance gaps, reduce risk, enhance your workplace and drive success with our FREE People & HR Audit!




Written by Joanna Breen

Jo Breen is co-founder of Breen & Associates - Results Through People.

Joanna Breen, co-founder of Breen & Associates - Results Through People, is a highly accomplished HR and business leader with over 25 years of experience. As a Fellow Chartered Member of the CIPD (FCIPD), she has excelled in HR strategy, operations, and transformational change across diverse industries. Joanna is also a seasoned Corporate and Executive Coach, with over 20 years of experience helping leaders achieve their full potential. With a proven track record advising at board level, she blends strategic expertise with a passion for developing people and driving business success.














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