By David Manning - Manager, Blockchain & Crypto Team While the title might seem dramatic, it is certainly the sentiment you will find across the array…
Today’s budget will be welcome news for employees and employers alike.
The low pay commission’s mandate is being expanded, with the aim of raising the national living wage to two thirds of median earnings by 2024. This is addition to the previously announced increases for the coming year of over 6% for both the national living and minimum wage.
Based on current projects, the national living wage could be as high as £10.50 by 2024, this would equate to fulltime employees aged 25 and over being entitled to an annual income of at least £21,000. In line with my previous comments on minimum wage enforcement, my concern is that while this measure is good news for employees, more employers will find themselves subject to compliance checks and those compliance checks will be targeting a larger population of the workforce. This will only increase the potential from minimum wage breaches and the financial penalties from those breaches.
In another boast to employees and the self-employed the minimum threshold for Class 1 employee and Class 4 self-employed national insurance, will increase to £9,500, from just over £8,600 currently.
Unfortunately, there doesn’t appear to be mirroring provisions for employers, meaning they will pay Class 1 national insurance on lower income levels than their employees.
However, there is some welcome relief for employers; while the previously announced changes to the employment allowance will restrict the access to the allowance, the amount of the allowance will increase from £3,000 to £4,000.
In addition, the chancellor has also announced a new national insurance holiday for employers of veterans during their first year of civilian employment, with the intention for the exemption to apply to earnings of the veteran up to the upper earnings limit. There will be a consultation issued shortly to consider the design of the relief, but it is intended to apply from 2020/21.
The impact for employers of the latest government advice on self-isolation and the extension to statutory sick pay being available from day 1 as opposed to day 4, was not lost on the chancellor. Consequently, a temporary measure was announced to support employers with fewer than 250 employees, who will now see 100% of their statutory sick pay costs being met by the government for sickness related to Coronavirus. This measure will apply to up to 14 days per employee.