As the Employment Rights Bill, introduced by the Government in October 2024, is set to take effect in 2026, there are several imminent changes in 2025 that social care providers need to address proactively. Here’s a comprehensive overview of key developments impacting the sector.
Zero-Hour Agreements and Rolled-Up Holiday Pay
Are You Employing Workers on Zero-Hour Agreements?
Since April 2024, rolled-up holiday pay has been reintroduced, simplifying how holiday entitlement is calculated for workers on irregular or zero-hour contracts. If your leave year runs from January to December, you can adopt this system starting 1st January 2025.
What Is Rolled-Up Holiday Pay?
Rolled-up holiday pay allows employers to calculate holiday entitlement based on hours worked in a specific pay period. Employers include an additional payment in workers’ wages, calculated as:
Hours Worked x 12.07% = Holiday Pay.
This additional payment must appear as a separate line item on payslips, clearly labelled as holiday pay.
How Is the 12.07% Rate Determined?
The 12.07% figure corresponds to the statutory minimum holiday entitlement of 5.6 weeks per year (20 days of annual leave plus 8 bank holidays). If your organisation offers enhanced holiday entitlements—e.g., 22 days plus 8 bank holidays—the percentage will increase accordingly to 13.04%.
Ensuring Fairness for Zero-Hour Workers
To maintain fairness and avoid discrimination claims, zero-hour workers should receive holiday entitlements equal to contracted employees. Unequal treatment could result in disputes or employment tribunal claims.
Implementing Changes to Holiday Entitlement
Before adopting rolled-up holiday pay or revising holiday allocation methods, consult with affected workers to secure agreement. Clear communication will help avoid potential claims related to unlawful deductions or disputes over pay reductions.
Taking a proactive approach to communication and consultation will help ensure that any adjustments are implemented smoothly while maintaining compliance with employment law.
Revised Statutory Rates Effective April 2025
From April 2025, several statutory rates will increase, impacting National Minimum Way, National Living Wage, Statutory Sick Pay (SSP), and family-related leave entitlements. Social care providers and employers across all sectors must ensure compliance by adjusting their pay structures accordingly.
Key Changes to Statutory Rates:
- National Living Wage (NLW)
- For workers aged 21 and over, the NLW will increase to £12.21 per hour, ensuring fair remuneration for adult employees.
- National Minimum Wage (NMW)
- For 18–20-year-olds: £10.00 per hour.
- For 16–17-year-olds and apprentices: £7.55 per hour.
- Statutory Sick Pay (SSP)
- The weekly SSP rate will rise to £118.75, offering improved financial support for employees unable to work due to illness.
- Statutory Maternity Pay (SMP) and Family-Related Leave Pay
- Pay for maternity, paternity, adoption, and shared parental leave will increase to £187.18 per week, providing enhanced support for workers taking family leave.
- Lower Earnings Limit (LEL)
- The LEL will increase to £125 per week, which determines eligibility for certain statutory payments, such as SSP and SMP.
Actions for Employers:
- Review Pay Rates: Employers must adjust pay rates to meet the new statutory requirements for all eligible employees.
- Update Payroll Systems: Ensure payroll systems are configured to reflect the updated rates and comply with legal obligations.
- Communicate Changes: Notify employees about the upcoming changes to statutory rates, particularly those directly affected by pay adjustments.
- Plan Budgets: Employers, especially in the social care sector, should account for these changes in their financial planning to manage increased wage costs effectively.
Importance of Compliance
The annual adjustments to statutory rates are intended to protect workers' earnings and ensure fair compensation in line with inflation and living costs. For employers, staying compliant not only avoids penalties but also reinforces their commitment to fair treatment and legal adherence.
Employers are encouraged to review the full government guidance on statutory rate changes and seek professional advice if needed to ensure a smooth transition.
Neonatal Care Leave and Pay: Expected in 2025
A significant development in family-related employment rights, Neonatal Care Leave and Pay, is anticipated in 2025. While the exact implementation date remains unannounced, this entitlement will provide:
- Statutory leave and pay for parents caring for babies receiving neonatal care.
- Support during challenging times by helping parents balance work and caregiving responsibilities.
Employers should monitor updates on this legislation throughout 2025 to ensure timely compliance.
Final Thoughts
Staying informed about legislative changes and statutory rate adjustments is crucial for social care providers. Proactively addressing these updates will help maintain compliance, ensure fair treatment of employees, and reinforce trust within your workforce. By preparing now, you can navigate these changes effectively and continue delivering essential care services.
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