As we move into 2025, small business owners need to prepare for critical legal and compliance updates that could impact their operations. From employment law reforms to new health and safety guidelines, staying informed is essential to protect your business, avoid penalties, and maintain a fair workplace.
In this guide, we’ll highlight the key legal changes expected in 2025 and provide actionable advice to help you stay compliant and confident.
Employment law must-knows for 2025
Several significant employment law changes are expected to take effect this year. Here’s what you need to know and how to prepare:
1. Holiday pay reforms to simplify calculations
One of the standout recent changes is the allowance for rolled-up holiday pay. Employers will have the option to include holiday pay—calculated as 12.07% of a worker’s wage—directly within regular pay. This reform is especially beneficial for businesses employing workers on irregular hours or short-term contracts.
What this means for your business:
- Simplifies the administrative burden of managing holiday pay.
- Clear communication with employees about how their holiday entitlement is being handled is required.
Action Steps:
- Update Payroll Systems: Ensure your payroll software can accommodate the rolled-up holiday pay option.
- Review and Revise Contracts: Clearly state the use of rolled-up holiday pay in contracts and provide detailed pay breakdowns.
- Communicate with Staff: Explain the changes to employees and address any questions to maintain transparency and trust.
2. Extended redundancy protections for parents and carers
Under the anticipated Protection from Redundancy (Pregnancy and Family Leave) Act, redundancy protections will be extended to cover pregnant employees and those returning from maternity, adoption, or shared parental leave. These protections will apply from the start of pregnancy through to six months after the employee’s return to work.
What this means for your business:
- Requires employers to justify any redundancy decisions involving protected employees.
- Employers must explore suitable alternative roles to safeguard employment.
Action Steps:
- Update Your Redundancy Policy: Align your policies with the new requirements and document efforts to provide alternative roles.
- Manager Training: Equip HR and management teams to handle redundancy processes in line with the extended protections.
- Keep Records: Maintain detailed records of decisions and communications to demonstrate compliance if disputes arise.
3. Inclusivity and anti-bullying legislation
The proposed Bullying and Respect at Work Bill aims to set higher standards for fostering respectful workplace cultures and tackling bullying or harassment. While specifics are expected later in 2025, businesses should take proactive steps to prepare.
What this means for your business:
- Employers may need to demonstrate measures to prevent bullying and harassment.
- Clear anti-bullying policies and regular training could become a compliance requirement.
Action Steps:
- Review Policies: Update or introduce anti-bullying and harassment policies.
- Invest in Training: Provide workplace respect training to employees and managers.
- Introduce Reporting Systems: Set up confidential, accessible channels for employees to report concerns safely.
These employment law changes are designed to promote fairness, inclusivity, and transparency in the workplace. Preparing now will ensure your business is compliant while building a positive and supportive work environment for your team.
Health and Safety must-knows for 2025
Keeping your workplace safe isn’t just about meeting legal requirements - it’s about creating an environment where employees can thrive. In 2025, businesses should expect updates to health and safety regulations that focus on risk management and sector-specific requirements. Here’s what you need to know.
1. Upcoming health and safety legislation
The Health and Safety Executive (HSE) will continue to align regulatory updates with its Common Commencement Dates, typically in April and October. These changes may include new risk assessment requirements and updates to existing regulations.
Action Steps:
- Monitor HSE Announcements: Regularly check HSE’s Forthcoming Legislation page for updates.
- Review Risk Assessments: Ensure your risk assessments comply with the latest standards and are updated regularly.
2. Industry-specific health and safety requirements
Each industry has unique health and safety challenges. In 2025, businesses in construction, retail, and hospitality must pay close attention to sector-specific guidance.
Construction Sector:
- Employers must comply with the Construction (Design and Management) Regulations 2015 (CDM 2015) to ensure projects are planned and managed safely.
- Key risks include exposure to hazardous substances like asbestos and silica.
Retail Sector:
- Common risks include manual handling injuries, slips and trips, and workplace violence. Employers are responsible for assessing these risks and implementing preventive measures.
Hospitality Sector:
- Safe maintenance of equipment and facilities is critical. Employers must also provide adequate welfare facilities, such as clean restrooms and drinking water.
Action Steps:
- Tailor Training: Provide industry-specific health and safety training to employees.
- Conduct Regular Audits: Schedule regular inspections to identify and address potential hazards.
3. General health, safety, and welfare requirements
The Workplace (Health, Safety and Welfare) Regulations 1992 apply to most businesses, ensuring that workplaces meet basic safety and welfare standards.
Key areas to review:
- Workplace maintenance: Ensure buildings and equipment are safe and in good repair.
- Lighting and ventilation: Provide adequate lighting and ventilation for a comfortable working environment.
- Welfare facilities: Maintain clean and accessible facilities, including restrooms and drinking water.
Action Steps:
- Invest in Maintenance: Allocate resources to regular upkeep of facilities and equipment.
- Evaluate Employee Welfare: Assess whether your facilities meet the needs of your workforce, including those with disabilities.
- Schedule Check-Ins: Review safety practices and standards regularly to address issues before they escalate.
Health and safety compliance is a vital part of running any business, and staying ahead of changes in 2025 is essential. By tailoring your practices to sector-specific requirements, conducting regular risk assessments, and keeping up with HSE guidance, you can create a safer workplace for your employees and customers.
GDPR and data protection must-knows for 2025
In 2025, GDPR compliance will continue to be a critical focus for businesses, especially as data privacy regulations evolve and enforcement efforts increase. Small businesses must prioritise secure data handling, transparent policies, and regular audits to protect sensitive information and avoid fines. Here’s what to watch out for this year.
1. Increased scrutiny on data transfers
With ongoing adjustments to post-Brexit data-sharing rules, businesses that transfer data internationally must stay vigilant. The UK’s adequacy agreements with the EU remain intact, but new rulings or updates could impact compliance for SMEs handling cross-border data.
Action Steps:
- Review Data Transfer Processes: Ensure all international data transfers comply with GDPR and the UK Data Protection Act 2018.
- Implement Safeguards: Use Standard Contractual Clauses (SCCs) or other approved mechanisms for secure transfers.
- Monitor Developments: Stay updated on rulings from the Information Commissioner’s Office (ICO) that may impact cross-border operations.
2. Focus on secure data storage and handling
High-profile breaches in recent years have led to stricter enforcement around secure data handling and storage. SMEs must demonstrate that they are proactively managing risks to protect customer and employee data.
Action Steps:
- Conduct Data Audits: Regularly review what personal data you collect, where it’s stored, and who has access.
- Invest in Cybersecurity: Implement firewalls, encryption, and two-factor authentication to safeguard data.
- Limit Data Collection: Only collect the personal information you need, and establish retention policies to delete data that’s no longer required.
3. Transparent privacy policies
Transparency remains a cornerstone of GDPR. Businesses must provide clear and accessible privacy policies to inform customers and employees how their data is used.
Action Steps:
- Update Privacy Notices: Ensure they reflect any changes in how you process data in 2025.
- Simplify Language: Use plain English to make privacy policies easy to understand for your audience.
- Publish Policies Accessibly: Make sure your privacy policies are easily accessible on your website and in communications with customers.
4. Staff training on GDPR best practices
Even the best data policies won’t work without employee awareness. Regular training helps ensure your team understands their role in maintaining compliance.
Action Steps:
- Provide Annual Training: Cover topics like secure data handling, phishing awareness, and incident reporting.
- Set Expectations: Ensure employees understand the importance of compliance and the consequences of breaches.
- Empower Your Team: Create a culture of accountability where employees feel responsible for protecting data.
Data privacy and security are non-negotiables in 2025. By staying updated on GDPR requirements, conducting regular audits, and empowering your team with the knowledge to maintain compliance, your business can avoid costly fines and build customer trust.
FSB legal and compliance resources to help you stay ahead
Navigating legal and compliance changes can be challenging, but FSB provides tools and guidance to keep your business on track. As a member, you’ll have access to:
- 24/7 Legal Advice Helpline: Speak directly with experts for guidance on legal or compliance issues. Read more here.
- Legal Templates and Documents: A library of over 1,400 downloadable resources, including contracts, policies, and risk assessments.
- GDPR and Compliance Tools: Practical tools, such as a 12-point GDPR compliance checklist, to help you manage data protection and meet evolving requirements.
With these resources, you can handle legal challenges confidently and focus on running your business.
Stay ahead of legal and compliance changes in 2025.