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On the 30th of October 2024, the Labour Government announced its Autumn Budget. The budget included notable changes for employers to consider.

Increase to National Minimum Wage Rates

In advance of the budget, the Chancellor announced increases to both the National Minimum Wage and the National Living Wage based on recommendations from the Low Pay Commission. The increases are set to come into effect on 6 April 2025. The Chancellor confirmed the following updated rates:

Employees aged over 21: Increase from £11.44 to £12.21 an hour, a rise of 6.7%.

18–20-year-olds: An increase of over  16%, from £8.60 to £10.00 an hour.

Apprentices (16-17 year-olds): An 18% increase, from £6.40 to £7.55 an hour.

These changes are part of a broader Government pledge to  move towards a single adult rate  across all age groups. It is expected that the 18–20-year-old rate will continue to increase until it reaches the same level as the over-21 rate.

Changes to Employer’s National Insurance Contributions

The Chancellor announced that employers’ National Insurance contributions will rise from 13.8% to 15%, effective from April 2025. Additionally, the threshold at which employers start paying National Insurance contributions will be lowered from £9,100 to £5,000.

As a concession to smaller employers, the Government also announced changes to the Employment Allowance, increasing it from £5,000 to £10,500. This is welcome news for smaller businesses, as it will mean that 865,000 employers will not pay be required to pay any National Insurance contributions.

How should employers prepare?

Employers need to take proactive steps in preparation for the changes coming into effect. We would recommend that employers:

Review and Update Employment Contracts

Employers should ensure that  employment  contracts, including those dealing with apprentices, are updated in line with the new National Minimum Wage rates.

Assess Financial Impact and Budgeting

The increased National Minimum Wage rates and National Insurance contributions will impact business finances. Taking the time now to forecast these costs will allow for smoother transitions in 2025.

Ensure payroll systems are updated

This will ensure that employees are paid at the correct rate from the point the changes come into effect.

Seek Expert Guidance

Seeking guidance from employment law experts, like our team at Slater Heelis, can be invaluable. We’re here to help you handle these changes, ensuring your business remains compliant while protecting both your interests and those of your employees.

Final Thoughts

Our employment law specialists are on hand to provide guidance, support, and practical solutions tailored to your business’s unique needs. Whether it’s updating contracts, revising policies, or offering strategic advice, we’re here to help you. Contact us today by filling out our online contact form or give us a call on 0330 111 3131.