The HR Spring Clean

3 Essential HR Steps to Prepare for the New Financial Year

As we settle into 2025, there is plenty of work to do... Even though one new year has just passed, another is fast approaching - the new UK financial year, starting on 6th April. 

This marks a critical opportunity for businesses to reassess their finances, operations, and ways of working. 

For SMEs, particularly those with solo HR professionals or individuals handling HR alongside other roles, this period can be overwhelming. And in 2025, the challenge is even greater, with significant changes to employment costs and laws on the horizon.

So where should you start? 

Here are 3 actions you can take to ensure your HR Compliance and remain profitable, productive, and HR compliant in 2025-26. 

Think of it as an HR spring clean.

1. Workforce and Budget Planning

Workforce planning should be the top priority for every organisation this year. The UK government has announced measures that will significantly impact employment costs, including increases to the National Minimum/Living Wage and National Insurance.

If you haven't already, you should review payroll budgets to assess the impact of payroll costs. One key challenge will be maintaining differentials for more experienced roles, so it's important to plan for this, looking at market rates and considering restructuring pay scales to remain competitive.

We would also recommend reviewing other HR related expenses, and budgeting for these too, think about:

• Training expenses
• Employee benefits
• Recruitment costs

2. Policy and Compliance

The Employment Rights Bill will bring about the most significant changes in UK employment legislation in recent years. 

In October 2024, the Worker Protection Act brought about new legislation meaning employers now have a duty to prevent sexual harassment in the work place and need to be demonstrating the steps they are taking to ensure this.

Next month, in April 2025 we will also see the introduction of Neonatal leave and pay.

Most other changes are expected to take effect from 2026, but considering these early will help you prepare. The areas to focus on will include changes around day-one employment rights, the removal of SSP waiting days, the right to switch off, and changes to zero-hours contracts.

3. Employee Engagement and Development

Investing in employee engagement and development may seem counterintuitive in the short term. However, by proactively investing in your team you can improve productivity and reduce long-term recruitment costs while improving employee engagement and loyalty. If employees feel undervalued, they are more likely to leave, meaning the costs of recruiting and training new staff can quickly grow in the long term.

Here’s what we would recommend:

• Engagement Survey: Conduct a survey with your team to understand how they feel towards the organisation and their role. Use the data to make changes and improvements.
• Organise regular 121s: To support with performance and general wellbeing support. As well as create personalised development opportunities aligned with employee career goals.
• Training: As a minimum your team should have training on compliance-related topics such as preventing harassment, GDPR, and health and safety. Regular training to help upskill them with skills fit for the future e.g. Training on the use of AI will be beneficial both to their development and your business.

Key takeaways:

1. Review your budget: Prepare for higher National Insurance contributions and wage increases as well as considering other costs involved in creating a high performing and engaged team.
2. Stay ahead of legal changes: Begin updating policies in line with the Employment Rights Bill and organise training for managers and employees.
3. Invest in employee engagement and development: Focus on employee development to improve retention and productivity as well as save on future recruitment costs.

By taking these proactive steps, SMEs can navigate the challenges of the 2025 financial year with confidence and stability.

We get that this can feel a lot, if this sounds like something you need help with then we would love to chat.

Contact us today.