Upcoming Regulatory Changes and What They Mean for Employee Benefits

The world of employee benefits is shifting, and HR teams must be prepared. With new regulations—including pay transparency laws in the EU, National Insurance increases in the UK, and proposed pension reforms—businesses need to stay ahead to ensure compliance while also managing costs and employee expectations.

At first glance, these changes might seem like yet another regulatory burden, but in reality, they offer an opportunity for HR teams to improve transparency, refine benefits strategies, and enhance their employer brand. The key is knowing how to navigate them effectively.

What’s changing?

The EU Pay Transparency directive

In a major move toward greater pay equity, the EU has introduced the Pay Transparency Directive, which will take full effect by June 2026. This regulation is designed to combat pay gaps by ensuring salary clarity and fairness across workplaces.

For HR teams, this means new obligations, including:

• Salary transparency during recruitment: Employers must disclose salary ranges in job postings and are prohibited from inquiring about candidates' salary histories.​
  
  
• Gender pay gap reporting: Organisations with at least 150 employees are required to report on gender pay gaps, with the threshold decreasing to 100 employees after four years.
  
  
• Right to pay information: Employees can request information on average pay levels, broken down by gender, for categories of workers performing the same work or work of equal value.

While these rules may present administrative challenges, they also push businesses to be more transparent about their pay structures, which can boost trust, attract top talent, and improve retention. The companies that embrace this shift early—by conducting internal salary audits and ensuring pay structures are equitable—will find themselves in a stronger position than those scrambling to comply at the last minute.

National Insurance increases

In the UK, employer National Insurance Contributions (NICs) are set to increase from 13.8% to 15% in April 2025. This means a direct rise in payroll costs for businesses, potentially squeezing budgets further in an already challenging economic climate.

To manage this impact, many businesses are turning to salary sacrifice schemes, where employees trade a portion of their salary for benefits like pension contributions or other tax-efficient perks. This approach can reduce the NIC burden for both employers and employees while ensuring that workers still receive valuable benefits.

As payroll costs rise, HR teams will also need to re-evaluate benefits spending and look for ways to offer impactful benefits without unnecessary cost increases. Smart benefit strategies—such as employee-controlled flexible benefits or financial wellbeing programs—can help businesses remain competitive without simply increasing salaries.

Pension reforms

Pension reform is also evolving, with a focus on expanding auto-enrolment and increasing minimum contributions. Proposed changes include:

• Lowering the minimum age for auto-enrolment (currently 22) to 18 years old.
• Removing the lower earnings limit, ensuring all earnings count toward pension contributions.
• Possible contribution increases, shifting more responsibility onto employers to support long-term financial security.

These reforms aim to boost retirement savings, but they also increase employer costs and administration.

That said, these changes haven’t been made official–yet. So employers should stay informed about potential future changes to auto-enrolment criteria to ensure compliance and optimal benefits administration.​

What does this mean for HR?

These regulatory shifts may feel like another compliance headache, but they also create opportunities to refine HR strategies and position businesses as leaders in fair pay and employee wellbeing.

From a compliance perspective, failing to align with these new laws could lead to financial penalties, reputational damage, and even employee lawsuits. Payroll teams will need to stay on top of National Insurance changes, while HR leaders must prepare for pay transparency reporting requirements and ensure pension enrolment processes are ready for possible reforms.

On the cost side, companies will need to navigate higher payroll expenses from NIC increases and potential pension changes, meaning efficient benefits management will be more important than ever. Instead of simply increasing salaries, businesses can optimise their total rewards strategy to ensure every pound spent on employee benefits is meaningful and effective.

But beyond compliance and cost control, these changes also offer a competitive edge. Businesses that embrace transparency, invest in employee financial wellbeing, and optimise benefits to meet new expectations will stand out as top employers—attracting and retaining talent in an increasingly benefits-driven job market.

How to stay ahead: Practical steps for HR teams

1. Prepare for pay transparency now

Start by conducting an internal salary audit to identify and fix any pay disparities before public reporting requirements take effect. Train managers on fair pay practices, and ensure job ads include clear, competitive salary bands. Taking proactive steps now can prevent compliance issues later.

2. Offset NIC increases with intelligent benefits

With employer National Insurance contributions rising, rethink your benefits strategy. Salary sacrifice schemes can reduce payroll tax burdens, while flexible benefits platforms allow employees to choose perks that are cost-effective yet highly valued.

3. Stay ahead of pension changes

Even though pension reforms aren’t yet law, businesses should prepare by reviewing auto-enrolment processes and exploring ways to enhance pension contributions in a cost-effective manner. Communicating clearly with employees about their pension options will also be essential in boosting engagement.

4. Automate and streamline benefits management

Manually handling pay transparency reporting, NIC adjustments, and pension enrolment is a time-consuming burden for HR teams. Investing in intelligent benefits technology—like Ben—can automate compliance, simplify payroll adjustments, and provide real-time insights to optimise benefits strategies.

Helping you navigate regulatory changes

Navigating complex benefits regulations doesn’t have to be overwhelming. Ben’s intelligent benefits platform helps HR teams automate compliance, manage costs, and deliver benefits that truly make a difference.

Whether you need to streamline payroll adjustments, optimise pension enrolment, or introduce flexible benefits that work within your budget, Ben makes it effortless.

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