In the evolving landscape of employment law and business management, 2025 is shaping up to be a year of unprecedented change. As organisations grapple with rising employment costs and sweeping legislative reforms, the need for strategic adaptation has never been more critical.
Recent research indicates that 4 out of 5 organisations anticipate large-scale redundancies in the next 12 months, highlighting the urgency of preparing for these challenges while maintaining both compliance and compassion.
A new era for employment rights
The Employment Rights Bill represents one of the most significant shifts in UK employment law in recent decades. Currently at the ‘Report Stage’ following extensive committee review, the Bill introduces several transformative changes that will reshape employer-employee relationships.
Stefan Mars, Head of Legal at Halborns, outlines the key provisions: “The Bill brings significant changes, from day-one unfair dismissal rights and boosted trade union rights. Although the majority won’t kick in until 2026, preparation is key for employers to get ahead of the curve – and stay there.”
These changes arrive alongside recent increases in National Insurance contributions and minimum wage requirements, creating what many are calling a perfect storm for businesses. The combination of increased employment costs and enhanced worker protections presents a complex challenge: organisations must simultaneously invest in compliance while managing rising operational expenses.
Beyond cost-cutting: A strategic approach to change
Simon Fowler, CEO of the Empowering People Group says,“I recently read a Deloitte article and while 52% of finance leaders rate cost reduction as a top priority, focusing solely on immediate financial gains could prove counterproductive.”
Clare Cowen, Commercial Director at Working Transitions, emphasises the importance of a more nuanced approach: “This really is a perfect storm for organisations; however we need to look at this through a positive lens and focus on the opportunities it brings for transformation.”
Clare suggests a three-pronged approach to navigate these changes effectively:
- Empowering line managers
The role of the “accidental manager” – those promoted for technical rather than leadership skills – needs particular attention. “By equipping line managers with the knowledge, skills and tools to be more accomplished people leaders, they will have a significant impact on the productivity and success of their teams,” notes Clare.
- Strategic workforce development
In a tight labour market, upskilling existing employees offers multiple advantages. Beyond improving productivity and innovation, it can reduce recruitment costs and build organisational resilience. This approach becomes particularly crucial when workforce growth is constrained by economic pressures.
- Technology-enabled transformation
Digital solutions that streamline processes and provide data-driven insights can significantly reduce administrative burdens while improving decision-making.
Simon emphasises: “By leveraging technology to enable data-driven decision-making, organisations can identify and address the root cause of issues, including identifying areas of poor culture or poor performance, or surfacing areas where well-being issues need to be proactively managed.”
Managing change with compliance and compassion
Another challenge for organisations in 2025 is the recent update to collective consultation duties, effective from January 20th, 2025, introduces increased penalties for non-compliance, including potential 25% increases in compensation awards.*
Stefan explains: “If an employer fails to comply with their duty to collectively consult about a redundancy situation affecting 20 or more employees in a 90-day period, employment tribunals can now increase the compensation paid to each employee by up to 25%.”
However, compliance alone isn’t enough. Clare stresses the importance of compassionate implementation: “Compliance is critical in redundancy situations to limit legal risk, however if the process excludes compassion, that is a risk in itself. If done with empathy, the lasting impact will be significantly reduced.”
Key considerations include:
- Providing clear, transparent communication about large-scale changes;
- Offering comprehensive support for impacted employees;
- Preparing managers for their role in change management;
- Supporting the wellbeing of both departing and remaining employees.
*The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 is the legislation introducing the change.
Looking ahead: Strategic priorities for HR leaders
As we move through 2025, HR leaders should focus on:
- Reviewing and updating people policies to align with new legislation;
- Investing in line manager capability, development and support systems;
- Implementing robust technology solutions for people management;
- Building organisational resilience through strategic workforce planning;
- Developing compassionate approaches to organisational change.
Stefan emphasises the urgency of preparation: “With the increase in compensation limits that came in this month, and the further changes to come in the new Bill, now is the time to prepare and engage to ensure you’re not caught out. As organisations brace for the impact of the budget changes and legislation, making longer term, strategic decisions about how you protect the business is essential.”
Time for action
The time to prepare for these changes is now. Organisations should be reviewing their people policies, processes and technology stack to ensure they’re ready for the challenges ahead. While the immediate focus might be on cost management, the long-term success of organisations will depend on their ability to build engaged, productive workforces while navigating complex regulatory requirements.
By taking a strategic, people-first approach to these challenges, organisations can turn this period of change into an opportunity for meaningful transformation. As Simon concludes: “Although we’ve talked about how organisations can look at ways to achieve efficiencies and that redundancies don’t have to be the only option for cost reductions, there will inevitably be an increase in redundancies as organisations face the challenges to come in the year ahead. The key is to manage this change with both compliance and compassion in mind.”
Keep up with the insights from our experts
Sign up for our on-demand webinar, People priorities 2025: What you need to know, where our experts break down the key strategies for navigating legal and business change in 2025 as well as practical tips for effectively managing redundancies. Click here to watch and equip your organisation for the future.
Sign up for our next session, People priorities 2025: Business driven HR and a manager empowerment conundrum, in which we’ll be exploring strategies for effective leader and manager empowerment to free up HR to prioritise and tackle strategic objectives. Sign up here to secure your place.
Supporting your journey
Our experts across the Empowering People Group have extensive experience to support people teams, line managers and organisational success as a whole. Get in touch to discuss your goals and we can help.
Through our integrated family of companies, we provide comprehensive solutions that address the full spectrum of challenges outlined in this article:
- Employment law expertise and policy guidance through Halborns;
- Career management, coaching and outplacement support via Working Transitions;
- Technology solutions that streamline people processes and enable data-driven decisions with AdviserPlus;
- Training and development programmes to empower your managers and teams with Learning Nexus.
Whether you’re preparing for the Employment Rights Bill, enhancing your redundancy processes, or transforming your approach to people management, we’re here to help you navigate these changes successfully. Contact us today to discuss how we can support your organisation’s specific needs and objectives.
