The Budget 2024 – Key Changes for Employers and Employees

Yesterday’s Budget brings changes that will impact employees and employers. Here, we highlight some of the key changes that will affect personal taxes, wages, benefits and business taxation that could shape the job market over the coming years.

The Minimum Wage increase is perhaps the most significant change. From April 2025, the National Living Wage for those over 21 will rise from £11.44 to £12.21 per hour, while for 18 to 20-year-olds it will jump from £8.60 to £10 per hour. This push towards a “single adult rate” of pay is part of a broader government strategy to reduce income inequality, which could boost the overall standard of living for entry-level workers and improve recruitment for companies in sectors with high staff turnover.

The 6.7% rise in the National Living Wage will however challenge many employers, particularly those in sectors like hospitality and care, which traditionally rely on lower-paid workers.

National Minimum and National Living Wage Changes

Increases to Employers NI Contributions

The budget introduces new changes in business taxes, which will likely impact hiring and employee compensation. From April, companies will see the NI rate on salaries over £5,000 rise from 13.8% to 15%. For smaller businesses, the employment allowance has increased from £5,000 to £10,500, providing some relief by reducing overall NI contributions which could encourage them to hire more staff or maintain wages despite rising costs.

Transport and Workplace Benefits

For individuals commuting to work, the continuation of the fuel duty cut until 2025 is positive news. However, bus fares in England outside London and Greater Manchester will increase, with a cap rising from £2 to £3. Employers who rely on commuter staff may see changes in transportation benefits or have to accommodate requests for more flexible working options.

The budget changes could lead companies to stop sharing National Insurance (NI) savings on salary-sacrificed pension contributions. If companies decide to end this practice, it may impact the long-term retirement savings of today’s workers. For many employers already stretched by economic pressures, this change might prompt a shift away from offering generous pension contributions, potentially overhauling existing contribution structures.

Employment Rights Bill

In addition to these financial adjustments, employers will also face new regulatory changes under the government’s recently introduced Employment Rights Bill. This legislation aims to meet objectives from the Plan to Make Work Pay by enforcing 28 pivotal reforms across employment practices. Some of the most notable proposals include day-one rights for workers, such as protections against unfair dismissal from the first day of employment, as well as enhanced safeguards against workplace harassment.

These changes are unlikely to come into effect until autumn 2026 at the earliest, offering employers some breathing space and an opportunity to review their policies, plan and prepare for adjustments in line with the new regulations.

Now is the time to consider how these changes will impact your recruitment and employment structures, policies and HR procedures. Staying ahead of these upcoming reforms will help businesses adapt more smoothly so please get in touch to find out how we can help.