The Top Legal Trends That Could Affect Your Business in 2025

Whilst Christmas is a time to relax and unwind, it provides the perfect opportunity to read up and get ahead for a successful and legally compliant 2025. One concern for many business owners is how changing legislation can affect their business next year. From data protection, to regulating the use of AI to employee rights, here we breakdown the top legal trends that could impact small to medium businesses in 2025.

AI Regulation

The influence of AI on the day to day running of businesses has been phenomenal over the last few years. From chatbots, content creation to streamlining tasks whilst the technology has been controversial, many companies are finding it an asset; as well as enjoying the benefits of artificial intelligence. The law is set to respond in an attempt to manage the emerging and rapidly growing technology; The EU signed into law its risk based regulatory framework which plays a key role in regulating how businesses use AI and ensure that consumers are protected. As a business owner, understanding how the regulation can impact your business is key to assessing to what extent you wish to engage the technology. Also, ensure you have internal governing policies in place to stay compliant.

Employee Rights

The Employment Rights Act 2025 received Royal Assent in December 2025, and its changes are coming in stages through 2026 and 2027. As an employer, knowing the dates is key to managing a legally compliant workplace. The main changes are:

1. Unfair Dismissal

For dismissals from 1 January 2027, employees can claim unfair dismissal after six months' service rather than two years, and the cap on compensation is removed. New protections against “fire and rehire” – dismissing staff and re-engaging them on worse terms – also start in January 2027.

2. Zero-Hour Contracts

Workers on zero-hours and low-hours contracts will get a right to be offered guaranteed hours that reflect the hours they regularly work, plus reasonable notice of shifts and payment when shifts are cancelled at short notice. The government will confirm the start date after consultation.

3. Statutory Sick Pay

Since 6 April 2026, Statutory Sick Pay has been payable from the first day of sickness, and the lower earnings limit has been removed, so lower-paid staff now qualify.

4. Tribunal claims

Since 1 October 2026, employees have six months, rather than three, to bring most claims to an employment tribunal. GOV.UK publishes the full timeline of changes, and some dates are still subject to consultation.

Additionally, understanding and being prepared for these changes can ensure a happier and healthier working environment for your business. We are here to support you with a free consultation on the new legislation and on-going legal advice throughout the year.

5. Data Protection

2025 is going to be an interesting year for data protection with the introduction of a new “recognised legitimate interest” ruling. Sounds complicated? It may actually make things easier. This will remove the need for user consent in certain cases. Under this significant ruling, data protection activities that are classed as essential to society or business will not require consent. Moreover, to understand the thresholds and ask specific questions relating to your business you can book a consultation to discuss with one of our teams. There may also be increases to data protection fees to assist the government with carrying out the required services.

Transparency of Company Ownership

When you start a business one of the first things you do is register at the company’s house. Knowing what, when and who you have to update the register with can be confusing. Also, with 2025 set to increase requirements for transparency making sure you are compliant is the key. If you have questions regarding the status of your filings, a simple chat with one of our team members could put your mind at rest. And at Waterstone Legal, that’s exactly what we are here for.

The Wrap Up

2025 is set to change the legal landscape for businesses with ambitious changes. The new legislation aims to increase employee rights, streamline data protection and regulate the use of AI. For business owners there will be increasing pressure to ensure their internal policies are in place and that ownership is transparent at the company’s house. Hence, staying up to date with legal changes will ensure you have a smooth and successful year. If you have any questions do not hesitate to get in touch with our team. Waterstone Legal is always here to take away headaches and keep you moving forward.