In 2025, UK work legislation changes are set to reshape employment conditions for both local and foreign professionals. These updates are particularly relevant for expats seeking opportunities in the UK and non-UK companies wanting to maintain compliance when hiring regional employees.

This article will explore the major UK employment law updates 2025, highlighting new rules around taxes, leave policies, payroll compliance, worker rights, and remote work. We’ll also discuss how an Employer of Record (EOR) service can help you navigate these changes seamlessly—whether you’re an individual aiming to settle in the UK or an international business expanding your workforce.

Key legislative changes in 2025

Below are the most significant UK employee rights 2025 updates confirmed by government sources. While some areas of UK law remain unchanged, the following topics have undergone notable revisions.

Minimum wage

Starting 1 April 2025, the national minimum wage rates will be raised across several age brackets. The national living wage will go up by £0.77, landing at £12.21 an hour. Workers aged 18–20 can expect their minimum wage to rise by £1.40, bringing it to £10.00 per hour, while those aged 16–17 will see an increase of £1.15, reaching £7.55 an hour.

​​These changes align with the government’s objectives, giving the national living wage its highest real value in the UK’s minimum wage history. Raising the 18–20-year-old rate shrinks the gap between it and the national living wage, signaling a possibility of extending the adult rate to workers aged 18.

Tax regulations

One of the most notable expat employment rules UK 2025 involves adjusted tax thresholds and modified reliefs, following consultations from HM Treasury and HM Revenue & Customs (HMRC). From April 2025, personal allowance thresholds and higher-rate bands will see incremental changes, which may affect how individuals and businesses approach income tax.

According to the 2023 to 2024 figures on GOV.UK: Income Tax Rates and Allowances, individuals have a Personal Allowance of £12,570, meaning no Income Tax is due on that initial portion of their earnings.

Once income exceeds £12,570 but remains at or below £50,270, the Basic rate of 20% applies. The Higher rate of 40% covers income from £50,271 up to £125,140, and anything above £125,140 is taxed at the Additional rate of 45%.

Pension scheme reliefs and certain business reliefs are also set to be updated, according to the Spring Budget 2025 announcements. It’s wise to refer to the official Budget Collections closer to the date for newly released documents that clarify these upcoming changes.

Additionally, companies may face revised corporation tax rates or incentives, so be sure to check for the latest information.

Leave policies

The government has introduced modest enhancements to parental leave entitlements, encouraging a more family-friendly work environment.

Under the new rules, starting in January 2025, eligible employees will gain an extra two weeks of paid parental leave, increasing the total duration of statutory leave available. This change applies to mothers and fathers, creating a more balanced approach to family responsibilities.

With the 2025 updates, these rates and allowances will be more closely tied to average wage growth, meaning both the £172.48 figure and the 90% threshold may be adjusted upwards. In practical terms, new mothers could see a slightly increased weekly amount during the bulk of their leave, reflecting the government’s aim to keep financial support in step with current earnings levels.

Moreover, maternity, paternity, and adoption allowances will be tied more closely to average weekly earnings, ensuring those payments better reflect current wage trends. In practical terms, new parents receiving these allowances should see their weekly pay rate climb in line with overall income growth, alleviating some financial pressures during a challenging period.

Payroll adjustments

In response to ongoing feedback about compliance challenges, payroll reporting requirements will become more streamlined for hiring employees in the UK.

Although Real-Time Information (RTI) remains the framework, employers must incorporate newly introduced data points—such as additional codes for flexible working arrangements—to enhance transparency.

• RTI updates: Employers must supply extra details on flexible or part-time roles, ensuring consistent data collection for HM Revenue & Customs (HMRC).
• Digital payslips: A push towards mandatory digital payslips for all employees, including casual and gig workers, is in the works.

Employee misclassification and worker rights

Because of ongoing debates about the gig economy, the UK government is adopting tighter definitions of self-employment that will affect businesses heavily dependent on contract workers or freelancers, particularly in delivery, rideshare, and tech-based marketplaces.

Under the new framework, clearer guidelines will be distinguishing employees, workers, and genuinely self-employed contractors, aiming to cut down on ambiguous employment statuses.

Notably, IR35, the UK’s regulation addressing off-payroll working and contractor classification, will remain a critical tool in enforcing compliance. Companies that continue to mislabel staff face stricter fines and potential legal action, underscoring the importance of reviewing existing workforce arrangements and ensuring everyone’s classification aligns with these updated rules.

Remote work provisions

Remote and hybrid work arrangements have gained further legitimacy, reflecting lessons learned over recent years. From 2025 onward, employees may have enhanced rights to request remote or hybrid setups, with statutory timelines for employers to respond.

• Right-to-request framework: Employees can formally request remote or hybrid schedules, and employers must provide a decision within a shorter, legally defined timeframe.
• Health and safety obligations: Companies must ensure remote workers’ home setups meet basic ergonomic standards.

Implications for employees and employers

For employees and expats relocating to the UK

With extended leave policies and updated employee rights emerging in 2025, British firms may become even more appealing for qualified professionals looking to build careers abroad.

At the same time, more stringent rules around freelancing and gig work could influence visa endorsements, particularly for those on sponsored routes who may need to show clear, formal employment.

If you plan to relocate to the UK, it’s worth noting that shifts in tax obligations or contract definitions can play a big role in whether your visa is granted—or your work situation remains stable once you arrive.

For employers

From a company perspective, the new tax and payroll reporting thresholds demand early alignment to avoid the scrutiny of HM Revenue & Customs.

Misclassifying staff could lead to serious legal action, so it’s crucial that HR teams reassess internal guidelines, especially in areas like leave entitlements or remote working.

Where workforce flexibility is a priority—like project-based hires or casual staffing—firms must revisit their contract structures and ensure they meet the stricter criteria for defining employees versus gig workers.

Employer of Record (EOR) services as a solution

With the sweeping changes in UK employment legislation for 2025, navigating compliance may feel daunting for both businesses and individuals. This is where an Employer of Record UK solution comes into play, offering tailored support to ensure seamless adaptation to the legal changes

For companies

• Payroll management: An EOR handles calculations for PAYE, National Insurance, and any new threshold changes introduced in 2025.
• Legal compliance: By monitoring the latest laws around worker misclassification and leave entitlements, an EOR ensures your business avoids penalties.
• Employee onboarding: From drafting compliant contracts to addressing remote work policies, the EOR provides a seamless onboarding process aligned with local legislation.

For employees and expats relocating to the UK

• Simplified relocation process: An EOR simplifies complex administrative tasks, including work permits, immigration compliance, and setting up UK-compliant employment contracts.
• Accurate tax and benefit management: By ensuring correct tax and National Insurance contributions, an EOR helps expats avoid errors and financial complications.
• Focus on career and community: With administrative details managed by experts, expats can concentrate on settling into their new environment, pursuing professional opportunities, and enjoying the cultural richness of the UK.
• Comprehensive support for smoother transitions: From clarifying healthcare coverage to providing insights into the UK’s employment systems, an EOR acts as a valuable guide through every step of the relocation journey.

Such services simplify complex tasks, enabling you to focus on hiring talented individuals in the UK without worrying about day-to-day administrative hurdles.

Looking ahead: preparing for 2025

Staying informed about UK work legislation changes 2025 is vital—whether you’re an expat eager to launch a new chapter or a company based outside the UK aiming to hire locally. Key updates range from payroll and tax shifts to enhanced remote work rights and stricter worker classifications. Taking timely action to understand these reforms will help avoid compliance pitfalls and potential fines.

Employer of Record (EOR) in the UK remains a practical solution for managing these evolving requirements. By offloading administrative responsibilities—payroll, tax filings, and local legal compliance—you can stay one step ahead of new regulations, ensuring your UK operations run smoothly.

If you have questions about UK employment law updates 2025 or need support to meet these requirements, get in touch to explore how EOR services can benefit your business or your personal relocation plans. You’ll be better positioned to succeed in an evolving UK employment landscape by proactively adapting to upcoming changes.

This article provides general information and should not be considered legal advice. Please consult with a qualified legal professional for specific guidance on UK employment law.