Autumn Statement 2023: Key takeaways for employers
Employers should take note of the upcoming changes announced in the Autumn Statement which relate to the world of work. In this alert we set out a brief summary of the key employment-related announcements.
National insurance contribution rates
The government announced that employee class 1 NICs will reduce from 12% to 10% from 6 January 2024. The government recognises that while rate changes usually take effect from 6 April, they want to "provide people with money in their pockets now".
Given the short timeframe, employers should be making changes to their payroll systems to comply with this change. The government has stated that there may be a minority of employers who do not amend their payroll system in time for employees to see the benefit in their January payslip and that employers should ensure they "rectify this in subsequent months [so] employees will receive the full value of the NICs cut".
National Living Wage (NLW) and National Minimum Wage (NMW)
The government will introduce changes to the age threshold of the NLW to those aged 21 and over (previously it was for those aged 23 and over) effective from April 2024.
From 1 April 2024 there will be a:
- 9.8% increase to the NLW for those aged 21 and over (from £10.42 to £11.44 per hour) – this is key to note given that a younger workforce now falls within this category and is entitled to the NLW.
- 14.8% increase for those aged 18-20 (from £7.49 to £8.60 per hour).
- 21.2% increase for those aged 16-17 and apprentices (from £5.28 to £6.40 per hour).
It is important that employers take note of these new rates and pay accordingly. It is also imperative employers are monitoring the ages of their workforce to ensure they are paid the correct rate, and particularly with the drop to the NLW in April 2024 to encompass those at least 21 years of age, a larger portion of workers will now be entitled a higher rate of pay.
Off-payroll working rules (IR35) changes
The government will introduce legislation to enable HMRC to reduce the PAYE liability of a "deemed employer", where that engagement was incorrectly treated as self-employed for tax purposes. This would account for tax and National Insurance contributions already paid by a worker and their intermediary on payments received from an off-payroll working engagement.
This will essentially mean a deemed employer will only have to pay the difference between what is due under PAYE under the relevant rules and what the contractor company has already paid to HMRC. Secondary legislation will be laid in due course to set out how it will work. The changes will take effect from 6 April 2024.
Back to Work Plan
The government has announced the "Back to Work Plan" which aims to support over a million individuals with long-term health issues or disabilities, or those who have been unemployed for a long time, to either enter or re-enter the workforce. This has become a growing issue in recent years, for example the number of people who are economically inactive due to mental health issues increased by over 35% between 2019 and 20231.
Examples include:
- Universal Support will be extended to those people who may have long-term health issues, including grants to pay for training and employer adjustments.
- Occupational Health – The government will establish an expert group to develop a voluntary framework which will set out the minimum level of Occupational Health intervention that employers could adopt to help improve employee health at work.
- Fit note reform – The government will explore end-to-end reforms of the fit note process to support more people to resume work after a period of illness. The government will launch a consultation in 2024 on wider reforms to help support people to return to work,
These are just some of the many initiatives being rolled out by the government to support the long-term sick and disabled into work.
Apprenticeships
There will be a two-year pilot of measures to promote apprenticeships within key growth sectors, such as engineering, manufacturing, artificial intelligence, and life science, particularly in relation to higher level apprenticeships.
For full details on the Autumn Statement provided by the Chancellor, please click here.
Get in touch
If you would like to discuss any of the above or any other employment law related issues, please feel free to get in touch with Paul Reeves, Reem Al-Saady, Leanne Raven, or your usual Stephenson Harwood contact.
