The Chancellor, Rachel Reeves, has today announced her first Autumn Budget since her party came to power. Amongst the vast array of announcements, covering everything from Capital Gains Tax to Fuel Duty, were those which will impact employers.

National Living Wage

Prior to the announcement in Parliament, increases to National Living Wage rates were confirmed with Reeves stating that the move would benefit more than 3 million workers and was a “significant step” towards delivering a “genuine living wage” for all employees.

The Chancellor confirmed that the government will accept the minimum pay commission recommendations to ensure living wage rates keep up with the cost of living.

From April 2025, the minimum wage for employees aged over 21 will increase by 6.7%. In a move towards a single adult rate, 18-20-year-olds will see a 16% increase in their wages while apprentices will get an 18% boost.

The wage rate increases are:

  • Over 21s – Increased from £11.44 to £12.21 an hour

  • 18–20-year-olds – Increased from £8.60 to £10 an hour

  • Apprentices – Increased from £6.40 to £7.55 an hour

Employers will need to ensure their employment contracts are updated and in line with the new rates by April 2025 to comply with these employment laws.

National Insurance

While the Chancellor has confirmed that there will be no change in National Insurance contributions from an employee’s perspective, employers’ national insurance contributions will increase to 15% from April 2025. National Insurance contributions for employers currently sit at 13.8%.

The threshold at which employers will start paying National Insurance on a workers’ wages will be lowered from £9,100 to £5,000.

Employment allowance will increase from £5,000 to £10,500, which the Chancellor says will mean 865,000 employers won’t pay any National Insurance at all next year.

These new announcements come after the recent Employment Rights Bill and Worker Protection Bill which have introduced a raft of changes, some of which have come into force and some of which are set to come into force in the next few years.

With such significant changes to employment laws affecting businesses, it is vital that employers and business owners ensure they are up to date with any new laws that affect their business’ policies and procedures.

Our employment law specialists at Farleys are on hand to advise and review your employment contracts, policies and procedures. Get in touch today on 0845 287 0939, by email, or through the online chat below.