How Could The Autumn Budget Announcements Impact Employment Law?
The upcoming UK Autumn Budget, scheduled for October 30, 2024, is expected to unveil a range of economic and policy initiatives that could have significant implications for employment law and workforce management. Chancellor Rachel Reeves is anticipated to address several pressing economic issues, particularly as the government aims to balance worker protections with support for businesses navigating the current financial landscape. Here’s a breakdown of potential areas that could affect employment law:
National Living Wage Increase
While not directly tied to employment law, a major anticipated announcement is an increase in the National Living Wage (NLW). Labour has hinted at raising the NLW from £10.42 to as high as £12 per hour, aligning with its commitment to reducing income inequality. For employers, particularly in low-wage sectors, this increase will have operational implications. Businesses may need to review employment contracts, adjust payroll budgets, and evaluate staffing needs to accommodate higher wage costs.
National Insurance Contributions Reform
Potential reforms to National Insurance Contributions (NICs) could indirectly impact employment law by shifting how companies budget for employee benefits. Labour has committed not to increase NICs for employees, but there’s speculation about adjustments to employer NICs, particularly for small and medium-sized enterprises (SMEs). Proposed changes could include increasing the Employment Allowance, making it easier for smaller employers to cover NICs, or introducing a progressive structure where larger corporations contribute more. These adjustments could affect employment-related costs, potentially influencing hiring practices and workforce expansion plans
Revised Apprenticeship System
A transformative proposal expected in the budget is the introduction of a “growth and skills levy” to replace the current apprenticeship levy. This would bring new flexibility to the apprenticeship system, potentially allowing for shorter, more targeted training programs tailored to specific job roles and sectors. Employers would have greater freedom in designing apprenticeships that meet immediate needs, without the strict 12-month minimum requirement currently in place. The reforms are expected to include incentives for businesses to adopt higher-level apprenticeships, aligning with Labour’s push to address skills gaps in the workforce
Workplace Protection and Harassment Legislation
Labour has made workplace protection a priority, with expected updates to harassment and discrimination regulations in line with the recent Worker Protection (Amendment of Equality Act 2010) Act 2023. This legislation, set to come into full effect by October 26, 2024, imposes more stringent requirements on employers to prevent workplace harassment. Under these regulations, employers will need to adopt proactive measures to protect employees from harassment by third parties, including clients and customers. This may involve changes to company policies, training programs, and complaint procedures, adding another layer of compliance for HR departments
Review of Employment Tax Reliefs and Allowances
To bridge the government’s budget deficit, Labour is considering adjusting or removing certain tax reliefs, including Employment Allowance for NICs. If implemented, this could reduce the financial support currently available to small businesses, impacting their ability to manage payroll expenses. Labour might also explore reforms in tax allowances tied to employee benefits, such as salary sacrifice for pensions, which could influence employer contributions and benefit schemes.
To Summarise
The 2024 Autumn Budget is expected to bring changes that, while not direct amendments to employment law, will affect employment practices and workforce management for businesses across the UK. Employers will need to remain vigilant and prepare to adjust to potential increases in labor costs, enhanced worker protections, and evolving training systems, as the budget seeks to balance worker rights with economic sustainability.