The State of Play: What's really keeping UK HR leaders awake at night in 2025
The Skills Crisis Has Gone Nuclear
The skills shortage isn't new, but it's reached crisis proportions. We're not just talking about traditional hard-to-fill roles anymore. I'm seeing companies struggling to find talent across every level, from entry-level positions to senior leadership roles.
What's made this particularly acute is the ongoing impact of immigration policy changes. The new points-based system continues to create bottlenecks for international talent, whilst the Skilled Worker visa requirements have made it increasingly difficult for many organisations to access the global workforce they desperately need. I'm working with clients who are having to completely rethink their talent acquisition strategies, and frankly, many are struggling to adapt quickly enough.
The combination of reduced EU migration, an ageing workforce, and the acceleration of digital transformation has created gaps that feel impossible to bridge. What's particularly challenging is that the skills needed are evolving so rapidly. The job spec that was relevant six months ago is already outdated.
The Hybrid Work Conundrum
Five years after the pandemic, you'd think we'd have cracked the hybrid working puzzle by now. But honestly, it's become more complex, not less. The novelty has worn off, and the reality has set in. We're seeing a real divide between organisations that have truly embraced flexible working and those that are still trying to force everyone back to pre-2020 patterns.
The challenge isn't just about where people work – it's about how to maintain culture, ensure fairness, manage performance, and develop talent when your workforce is scattered. I've had countless conversations with HR leaders who feel like they're running three different companies: the office-based employees, the fully remote workers, and the hybrid crew. Each group has different needs, different expectations, and frankly, different levels of engagement.
Compliance Complexity is Overwhelming
The regulatory landscape has become a minefield. The recent IR35 changes continue to cause headaches for large employers dealing with contractor relationships. I'm seeing organisations that thought they had their assessments sorted suddenly finding themselves having to revisit hundreds of contractor arrangements following the latest guidance updates.
Add to that the new employment rights legislation, evolving data protection requirements, and the ongoing uncertainty around post-Brexit employment law – it's enough to make even the most experienced HR professional's head spin. Just this month, I've had clients asking about everything from the new right to disconnect regulations to how to handle the latest changes in pension auto-enrolment.
The challenge isn't just understanding the rules – it's implementing them consistently across large, complex organisations whilst keeping up with the constant stream of updates and amendments. The IR35 assessment process alone requires a level of detail and documentation that many HR teams simply weren't prepared for.
The Changing Industrial Relations Landscape
What's particularly interesting is how the relationship between employers and trade unions is evolving. We're seeing renewed union activity across sectors that haven't experienced significant industrial action for years. The cost-of-living pressures, combined with changing workforce expectations, have created a perfect storm for industrial relations challenges.
Modern trade union negotiations aren't just about pay anymore – they're covering everything from AI implementation to flexible working arrangements to environmental policies. HR teams need to understand not just the legal framework around collective bargaining, but also how these evolving relationships impact everything from change management to employee engagement strategies.
The Mental Health and Wellbeing Mountain
Mental health awareness has rightly become a priority, but with that comes enormous responsibility and complexity. HR teams are being asked to be counsellors, coaches, and crisis managers on top of their traditional roles. The statistics are sobering – we're seeing unprecedented levels of stress, anxiety, and burnout across all sectors.
The tricky bit is that whilst everyone agrees mental health matters, there's still a massive gap between good intentions and practical, effective support. I'm working with organisations that have spent millions on wellbeing initiatives but are still seeing rising absence rates and employee satisfaction scores that are going backwards.
Technology: Friend or Foe?
AI and automation were supposed to make HR's life easier, but in many cases, they've added another layer of complexity. Yes, we can automate recruitment processes and use data analytics to predict turnover, but we've also created new challenges around algorithmic bias, data security, and the human touch that people still crave.
I'm seeing a real tension between the promise of HR technology and the reality of implementation. Many large employers are drowning in data but starving for insights. They've got dashboards coming out of their ears, but they're struggling to translate all that information into meaningful action.
The Expectation Evolution
Perhaps the biggest challenge is that employee expectations have fundamentally shifted. The psychological contract between employer and employee has been rewritten, and many organisations are still working from the old playbook.
Today's workforce expects purpose, flexibility, development opportunities, and genuine work-life balance – not just a competitive salary and decent benefits. They want to feel heard, valued, and part of something meaningful. They're not afraid to vote with their feet if they don't get it.
What's the Way Forward?
After 30 years in this business, I've learned that the organisations that thrive are those that embrace the complexity rather than trying to fight it. They invest in their HR teams, they're willing to experiment and fail fast, and they keep their people at the centre of every decision.
The key is getting the fundamentals right – proper IR35 assessments, clear immigration compliance procedures, and healthy industrial relations frameworks. Once you've got those foundations solid, you can build everything else on top.
The HR profession has never been more important or more challenging. But that's also what makes it so exciting. We're not just managing people anymore – we're shaping the future of work itself.
Elizabeth Smith is the Head of Research at BFI (www.bfi.co.uk), which has been delivering specialist HR training and conferences across the UK for over 30 years. BFI specialises in immigration law, trade union relations, and IR35 compliance training, working with hundreds of organisations from FTSE 100 companies to growing SMEs.
What challenges are you facing in your organisation?I'd love to hear your thoughts – drop me a line or join the conversation at our next free webinar.