The traditional post-election Summer Budget has set out further financial plans mandated by the new Government. Here is an overview of the aspects which will affect employers.
National Living Wage
This is the headline grabbing announcement made in the Budget. Chancellor George Osborne announced the introduction of the compulsory National Living Wage (NLW) from April 2016 affecting all employees age 25 and over. The NLW will start at £7.20 per hour and increase to £9 per hour by 2020.
The NLW, in effect, adds another layer in to the current National Minimum Wage bands. It should not be confused with the ‘Living Wage’; the voluntary pay rate which is calculated according to the basic cost of living in the UK which is currently set at £9.15 in London and £7.85 for the rest of the UK.
Sunday Trading Laws
There will be a consultation on the potential relaxation of Sunday trading hours in England and Wales. The current law restricts shops over 280 square metres from opening on a Sunday for more than 6 hours whilst smaller shops can open all day. The consultation will seek views on whether the control on trading laws should be devolved to local councils or mayors.
Extending Sunday opening hours could mean employers having to recruit extra staff or seek to amend terms and conditions with existing staff. The laws being devolved to different authorities could also mean that different branches of the same company could operate under different restrictions.
The Chancellor announced an ‘apprenticeship levy’ on large employers to aid the creation of 3 million apprenticeships by 2020. There are currently no indications on which large employers will be subject to this levy nor how much they will be expected to pay.
Other notable announcements
- The four year freeze on working age state benefits will not apply to statutory payments including statutory sick pay
, statutory maternity pay, statutory paternity pay etc.
- A consultation will be carried out on the tax and National Insurance contributions on termination payments
- Employment Allowance, currently £2,000, will increase to £3,000 from April 2016 reducing the employer’s National Insurance bill.
- Pay increases for public sector employees will continue to be 1% per year for the next four years.
For further clarification on how the budget impacts your business please contact my advice team on 0844 892 2772.