First published on Thursday, January 2, 2025
Last updated on Thursday, January 2, 2025
2024 was a busy year for business owners, especially within the world of HR. The UK saw a general election, its first Labour government in 14 years, and the “biggest shake up of employment rights in a generation”—to name a few.
With so many changes, employers understandably have questions about what might be on the horizon for 2025. The landscape will face its share of challenges and changes, including:
A continuation of the cost-of-living crisis
Increased technological advancements
The beginning of reforms under the new Employment Rights Bill
So how can business owners address the challenges head on? Here’s what we think…
The cost of living crisis continues…
According to research by People Management, one of the biggest concerns for employees throughout 2024 was the continued rise in the cost-of-living. And unfortunately, this isn’t going away.
"The UK is rapidly becoming a burnt-out nation, and a worrying number of people are taking time off work [owing] to poor mental health caused by stress. High levels of work absence [because of] poor mental health is a major challenge, but its causes are complex."
75% of HR directors saw a drop in productivity, resulting from employees being concerned, burnt out, or preoccupied with the stresses associated with the cost-of-living.
As the financial strain continues to affect households, your staff’s morale and wellbeing will be affected more than you might think.
Try to consider the financial implications on your staff if you’re planning a strict return-to-work policy. Also, consider looking into providing access to an Employee Assistance Programme to give your team someone to talk to when they need it most.
Other benefits you could consider offering include:
Discounted employee benefits (like those found on Bright Exchange)
Free food and drink
Pay increases (if you can afford it)
These measures can help boost retention and engagement, which is cheaper than constantly rehiring and training.
The rise of technology and AI
Lots of new technologies are emerging, leading many workers to worry about losing their jobs. This is especially true of AI.
AI and advanced technologies can enhance the satisfaction of your staff and boost productivity by automating various tasks. Alternately, job insecurity can drive high turnover, low productivity, and low engagement. So what can you do to avoid this?
Start by offer upskilling opportunities where you can, educating your staff on any new systems, technologies, or use-cases for AI. This way, you’ll provide the tools for success, while reassuring your staff of their future in your organization.
Autumn Budget fallout
In April, businesses will face new economic pressures stemming from the national minimum wage increases and changes to national insurance contributions. Meaning difficult decisions are ahead for many businesses. To manage the costs and avoid restructuring, consider optimising your business processes using cost-reducing systems or software. This way, you’ll offset the additional cost margins.
However, if redundancies are absolutely necessary, make sure that your policies are robust, fair, compliant, and followed correctly. And be mindful of the impact that these actions have on your remaining workforce. Burnout and employee disengagement for those remaining are an often overlooked issue and can pose real problems going forward.
Big legislation changes
The new Labour government is planning significant legislative change for business owners. The Employment Rights Bill and upcoming Equality (Race and Disability) Bill will bring huge reforms to workers’ rights, including pay gap reporting and equality action plans. And that’s just the tip of the iceberg.
Though many elements of the “Plan to Make Work Pay” won’t take effect until 2026, it’s crucial for your business to start planning ahead.
Culture is king
Company culture remains a huge priority for employees. It dictates everything from how your team interacts with each other to the values, beliefs, and attitudes you uphold in your organisation.
For millennials and Gen Z employees in particular, culture is a top priority when choosing the type of employer they want to work for. Looking ahead, your business needs to find genuine ways to showcase your culture to attract the best talent.
How BrightHR supports your business
There’s a lot for your business to contend with in 2025. But worry not, BrightHR has got your back.
Book a demo with one of our friendly experts to discover how our expert document templates, confidential 24/7 HR and health & safety advice, and streamlined HR software can support your business in 2025.
