Employers Concerned About Impact Of Pay Rises From April
Yorkshire’s LCF Works, which provides employers with unlimited telephone guidance on employment law, has revealed that since the start of the year nearly all calls to its advice lines have been about April’s new wage rates and National Insurance (NI) increases.
LCF Works was recently launched by leading Yorkshire law firm, LCF Law, and is an expert employment law and HR advice package that assists companies with employment issues providing unlimited advice, training and documentation, as well as support with drafting and implementing policies and procedures. The service typically appeals to employers that either don’t have a dedicated in-house HR provision or have a small HR team where expert legal advice is sometimes required.
On 29th October 2024 the government announced the annual increases to the national minimum and national living wages. For those aged 21 and over, the National Living Wage will rise by 6.7% to £12.21 per hour, up from £11.44. The National Minimum Wage, for those aged 18 to 20, will increase by a record 16%, from £8.60 to £10 per hour, while those aged 16 to 17 or on an apprenticeship will see their hourly rate increase by 18% from £6.40 to £7.55.
This is the largest ever increase for under 21s, closing the gap between 18 to 20-year-olds and 21 and overs by £0.63 and is the first step towards the government’s promise of a single rate for all adults.
The following day, as part of her Autumn budget statement, the Chancellor announced that employers’ NI will also increase by 1.2% from 13.8% to 15%, whilst the threshold at which NI is paid will decrease from £9,100 to £5,000 a year. This means that for an employee on £25,000 per annum, employers will pay around £67 per month more in contributions.
Employment law advisor, Brendan Bah, from LCF Works, explained: “Approximately 3million workers will receive significant pay increases in April. These will be worth around £1,400 per year for eligible full-time workers on the National Living Wage and those on the National Minimum Wage will enjoy an increase of approximately £2,500 per year.
“Whilst this is obviously good news for employees, employers are also going to see their Secondary Class 1 NI contributions skyrocketing as well, and the reality is that a lot of businesses are nervous about these significant cost increases.
“To support small businesses, the Chancellor also increased the employment allowance from £5,000 to £10,500 meaning 865,000 employers will not pay NI at all next year, while over a million companies will pay the same or less than they did previously.
“Since the start of the year we’ve been inundated with enquiries from businesses wanting to clarify the changes, update their procedures and, unfortunately, there are some that are also considering making redundancies.
“We’re working with them to identify all the available options. This might mean exploring whether changes to working arrangements and contractual terms are feasible, or looking at alternative and more flexible staffing models. Alternatively, it may be possible to offer more employee benefits using salary sacrifice arrangements, to reduce NI liabilities.”
Brendan added: “Crucially, employers require clear advice and practical support, which is where LCF Works really comes into its own. Employment legislation is constantly evolving and employers must be aware of the latest changes as well as having knowledge and support on hand whenever issues arise.”
LCF Works’ standard package starts from £200+VAT per month which includes a consultation to get to know the business and discuss any immediate issues, unlimited phone and email support, further in-person advice at LCF Law’s offices when necessary, a regular email newsletter and invitations to free seminars and mock tribunals.
LCF Law is an award-winning full-service law firm, which operates regionally, nationally and internationally, with over 145 people across offices in Leeds, Bradford, Harrogate and Ilkley.
LCF Law is an award-winning full-service law firm, which operates regionally, nationally and internationally.
With over 145 people including 22 partners across offices in Leeds, Bradford, Harrogate and Ilkley, LCF Law provides practical advice in a clear and efficient way: Law Fair + Square.
Visit www.lcf.co.uk for more details.
