Employment law: news in brief – December 2025

Another above inflation increase to the National Living Wage and National Minimum Wage

The government has accepted the recommendations of the Low Pay Commission and announced increases to both the National Living Wage and National Minimum Wage from April 2026.

The National Living Wage (payable to workers aged 21 and above) will go up by 4.1% from £12.21 to £12.71. 

Rates for the hourly National Minimum Wage rates will increase:

• By 8.5% for 18–20-year-olds – from £10.00 to £10.85
• By 6% for apprentices – from £7.55 to £8.00; and
• By 6% for 16-17-year-olds – from £7.55 to £8.00

The accommodation offset will increase by 4.1%, from £10.66 to £11.10 per day.

These figures are at the higher end of the predicted range published by the Low Pay Commission during the summer. They are all above the expected inflation rates between April 2026 and April 2027, giving workers a real-terms pay rise.

Government to introduce NICs on pension salary sacrifice 

The government has confirmed that, from April 2029, both employers and employees will pay National Insurance contributions (NICs) on salary sacrificed for employer pension contributions exceeding £2,000 per tax year. 

The change, announced in the Autumn Budget, will not affect employer pension contributions made outside salary sacrifice arrangements – these will remain exempt from NICs.

Employers must report the total amount sacrificed through payroll. The policy will be implemented through primary and secondary legislation introduced in due course, and detailed guidance is expected before the measure takes effect.

Employees can still make salary sacrifices above £2,000 if employers continue to offer such schemes. 

Ill‑health now poses the second‑biggest threat to careers in the UK

New research commissioned by AXA Health shows that 33% of UK workers view ill‑health as a major risk to their jobs, surpassing concerns about artificial intelligence (26%) and second only to economic worries (37%).

For employees aged 45 and over, ill‑health has become the number one fear, outpacing financial instability. Meanwhile, one-in-three young workers aged 16-24 believe they may have to retire early due to health issues, with many citing workplace stress as a barrier to a healthy lifestyle.

The survey also uncovered mismatches between employees' health intentions and their behaviours. Nearly half of all workers spend their lunch breaks scrolling through phones, 45% overall, and up to 53% among 35 to 44‑year‑olds, while only 9% use the break to exercise. Among those aged over 55, just 1% use the time for physical activity, and 18% skip breaks altogether. 

Older employees are reluctant to take sick leave, with those over 50 up to 200% less likely to call in sick compared to colleagues under 30. 

AI saves workers an hour per day

OpenAI has revealed that their tools, such as ChatGPT, are saving employees nearly an hour each day, according to new research unveiled this week. 

The findings, based on a survey of 9,000 professionals, indicate that users save between 40 and 60 minutes each day on average. 

The report highlights that 75% of respondents experienced improvements in either the speed or quality of their output thanks to AI. A similar number stated that AI allows them to perform tasks they were previously unable to complete. 

Industries like data science, engineering, communications, and accounting reported the most significant time savings.

Employers urged to step up as workplace stress surges

Nearly two-thirds of HR professionals report stress-related absences, yet only half of employers believe their efforts to tackle stress are effective, according to research by Simplyhealth and CIPD. 

Stress now ranks among the top three causes of both short and long-term absence, driven by heavy workloads, personal health issues, and family pressures.

UK employees took an average of 9.4 sick days over the past year (almost two full working weeks), marking a sharp rise from 7.8 days in 2023. 

Although 64% of organisations are working to identify and reduce workplace stress, only half believe their efforts are effective. Heavy workloads remain the leading cause at 41%, followed by personal health concerns at 37%, and family or relationship problems at 34%.

Pause on Christmas recruitment

UK employers have pressed the pause button on Christmas recruitment as uncertainty over the Chancellor’s Autumn Budget and the Employment Rights Bill took its toll. 

In November, the number of active job postings fell 11.2% month‑on‑month to 1,460,051 – a dip from October’s 1,669,395 roles, which had marked a 7.5% rise year‑on‑year. 

New vacancies also plunged, with November’s figures representing a 14.4% drop from October, signalling the second straight month of decline. 

Despite the slowdown, the Recruitment and Employment Confederation noted that the job market remained robust, with active postings sitting 3.2% higher than in November 2024. 

Disabled workers call for greater support and inclusive practices

Almost half of disabled employees and jobseekers report that their health conditions make it tougher to secure and retain roles, according to a recent Business Disability Forum survey of more than 1,000 adults. 

Additionally, 46% said they found it difficult to progress in their careers. 

Flexible working topped the list of measures that would improve their experience, with 46% identifying it as essential. A further 40% wanted managers to have a better understanding of disability, while 25% wanted a more positive attitude from employers toward disabled staff. 

The survey also revealed that 43% of disabled respondents found job hunting and interview processes more challenging than non-disabled people. Once in work, 32% felt unable to ask for support from colleagues or line managers.

Private sector pay awards climb to 3.4%

The private-sector median pay award rose to 3.4% in the three months to October 2025, up from 3.0% in the previous quarter, according to Incomes Data Research (IDR).

This growth was driven by a surge in higher pay awards: 31% of increases now stand at 4% or more, compared to 23% three months earlier. The increase was most pronounced in private services, though manufacturing and production sectors also contributed. 

Across the whole economy, the median pay award now reaches 3.7%, factoring in public sector settlements, a 0.3 percentage point premium over the private sector. The share of awards at 4% or above jumped from 35% to 46% in the same period. 

The public sector continues to drive these higher figures, with its median pay award at 4.1%, surpassing both private sector and overall economic averages

Government launches £725m apprenticeship reforms 

The Government has unveiled a £725 million apprenticeship reform package aimed at creating 50,000 new opportunities for young people over the next three years.

Under the reforms:

• Eligible under-25 apprentices at small and medium-sized enterprises (SMEs) will benefit from full funding as the government removes the 5% co-investment requirement
• A £140 million pilot will fund Mayoral partnerships to connect young people, particularly those not in education, employment or training (NEETs), with local employers
• From April 2026, foundation apprenticeships will launch in hospitality and retail, alongside short, flexible courses in AI, engineering, defence, and digital skills.

Unemployment rate at four-year high

UK unemployment jumped to 5.1% in the three months to October, its highest level in nearly four years, as the labour market showed clear signs of cooling ahead of last month’s Budget. 

The Office for National Statistics reported that the number of employees on payroll dropped by 38,000 in November, leaving total payrolled workers at 30.3 million. Wage growth – excluding bonuses – slowed to 4.6% in October, down slightly from 4.7% in September. 

Young workers bore the brunt of the downturn, with youth unemployment rising sharply.

 The situation has prompted economists to expect that the Bank of England may soon cut interest rates, as a cooling jobs market offers room to support the economy. 

More employment law updates – December 2025

• Employment Rights Bill finally passed: what does it mean for your organisation
• Breaking: day-one unfair dismissal rights binned but compensation limits are going up
• Are non-binary staff protected under the gender reassignment provisions of the Equality Act?
• Secret Santa and harassment: when banter backfires
• Is the government going to ban non-compete clauses?
• Justice delayed is justice denied: new figures paint depressing picture of employment tribunal system in crisis