We’re halfway through 2025, and what a year it’s been for HR!
If you’re feeling a bit overwhelmed by all the changes hitting your desk, you’re definitely not alone. Between cost increases, new legislation, and shifting workplace expectations, it sometimes feels like we’re trying to hit a moving target.
While 2025 was always going to be a year of significant change, for many, the reality has been more manageable than the headlines might have suggested.
Yes, there have been immediate impacts to deal with, and yes, more changes are coming. But organisations are adapting, the job market hasn’t crashed, and there’s a clear path through the noise. You’re making it through, even on the tougher days.
Let’s take a moment to look at what’s happened so far, what the real impact has been, and most importantly, how you can prepare for what’s coming next.
The HR Changes That Hit Your Budget
April brought the employment cost increases we all knew were coming, but the scale was still significant. The National Living Wage jumped from £11.44 to £12.21 per hour for workers aged 21 and over – a 6.7% increase. For younger workers, the impact was even more dramatic, with 18-20 year olds seeing their minimum wage rise from £8.60 to £10.00 per hour – a substantial 16.3% increase!
But that wasn’t all. Employer National Insurance contributions rose to 15%, while the threshold dropped from £9,100 to £5,000 per year. For many businesses, this represented a perfect storm of increased costs hitting all at once.
The good news is that the predicted job market collapse simply didn’t happen. According to Hiring Lab, despite concerns about the impact on retail and hospitality, job postings in these sectors saw only modest declines – retail down 2%, food service down 10%, and hospitality down 11%. While these are real impacts, they’re far from the dramatic cuts many feared.
What this tells us is that businesses have found ways to absorb these costs rather than immediately cutting jobs. It’s a testament to the resilience of UK businesses and their commitment to their workforce.
Immigration Changes Inbound
In May, the government published its Immigration White Paper, and it’s fair to say it represents a significant shift. The proposal to raise the minimum qualification level for Skilled Worker visas from A-level equivalent to degree level could affect around 180 occupations currently eligible for sponsorship.
If you’re in sectors like care, hospitality, or technical roles, this matters. The 32% increase in the Immigration Skills Charge and closure of social care visas to new overseas applicants (with transition until 2028) will affect recruitment pipelines significantly.
The key here is that these are still proposals, not law. But they signal a clear direction of travel, and smart organisations are already thinking about how to adapt their recruitment strategies.
The Employment Rights Bill’s Progress
The Employment Rights Bill has been making steady progress through Parliament, and the government’s approach has been refreshingly collaborative. The bill is currently at report stage in the House of Lords, with sessions scheduled for 14 and 16 July. Following this, it will need its third reading, which isn’t likely until September at the earliest.
Employment law experts expect the bill to receive Royal Assent at the end of September or early October 2025. However, as employment rights minister Justin Madders confirmed at the recent ACAS conference, there’s no strict timetable for implementation. Much of the work still needed involves creating codes of practice and framing secondary legislation.
The government’s collaborative approach has been evident throughout. In March, amendments were published following extensive consultations with business groups, trade unions, and wider civil society. This isn’t a government ramming through changes without listening. For example, the original proposal to completely remove the lower earnings limit for statutory sick pay was amended following feedback.
Most importantly for employers, while the bill may become law by autumn 2025, most reforms won’t take effect until 2026. This gives you time to prepare, but it also means staying engaged with the consultation process as implementation details are worked out.
Your Action Plan for the Rest of 2025
Get Your Budget Right
The cost increases from April are permanent, and more may be coming. The government has made clear its intention to continue above-inflation minimum wage increases. Review your budget assumptions for 2026 and model different scenarios.
Consider not just the direct wage costs but the knock-on effects. When you raise pay for your lowest-paid workers, you may need to adjust other pay rates to maintain fairness across your workforce.
Review Your Policies Now
Don’t wait for the Employment Rights Bill to become law before updating your policies. The consultation responses give you a good sense of what’s coming. Focus on:
- Flexible working arrangements – the strengthened rights coming in 2026 build on existing frameworks.
- Family leave policies – incorporate the new neonatal care entitlements.
- Disciplinary and grievance procedures – ahead of changes to unfair dismissal law.
- Zero-hours contracts – understand how guaranteed hours proposals might affect you.
Rethink Recruitment Strategy
If you rely on international recruitment, start developing alternatives now. Even if the immigration proposals are modified, the direction is clear. Consider:
- Investing more in domestic training and development.
- Exploring apprenticeship programmes as a pipeline for skills.
- Building relationships with local colleges and universities.
- Reviewing job requirements to ensure they’re genuinely necessary.
Invest in Your Managers
With strengthened employment rights on the horizon, good people management becomes even more critical. Your managers need to understand fair treatment, consistent policy application, and effective performance management.
Moving Forward with Confidence
The organisations that will thrive this year are those that see these changes as an opportunity to build better workplaces rather than obstacles to overcome.
Use the second half of 2025 to prepare thoughtfully, engage with consultations where relevant, and position your organisation as an employer of choice.
Change can feel overwhelming, but it’s also an opportunity. The businesses that embrace this opportunity will emerge stronger, with more engaged workforces and clearer competitive advantages.
After all, at the heart of all these changes is a simple principle: work should be a place where people can thrive, feel valued, and build meaningful careers.