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Budget 2020 for employers

March 2020

Changes for employers to note.

Yesterday saw Chancellor Rishi Sunak deliver Boris Johnson's government's first budget. As well as making provision for the emergence of the coronavirus, the budget confirmed national minimum wage (NMW) increases.

Coronavirus

Points designed to address employment issues as a result of coronavirus:

  • The cost of up to 14 days' statutory sick pay (SSP) for coronavirus-related absence will be covered for businesses with fewer than 250 employees
  • SSP will be made available to all those advised to self-isolate even if they haven't yet presented with symptoms
  • For these purposes a medical notification for employers will be made available via NHS 111 in place of a GP's fit note
  • Access to SSP will not be extended to the self-employed or those earning under £118 a week, but the government intends to make access to benefits easier for these people
  • The rate of SSP itself will increase to £95.85 from £94.25 on 6 April 2020

National minimum wage

  • The national living wage (NLW) (i.e. for those aged 25 and older) will rise to £10.50 an hour by 2024, compared to £8.21 at present
  • The NLW rise may be extended to those aged 21 and over by 2024, but the Chancellor has warned this will only happen 'as long as economic conditions allow'
  • From 1 April 2020 the national minimum wage ('NMW') rates will be:

National living wage

Standard rate

Development rate

Young workers

Apprentice rate

Accommodation offset

(25+)

(21+)

(18-20)

(16-17)

 

 

£8.72

£8.20

£6.45

£4.55

£4.15

£8.20

 

Apprenticeship Levy

The government has said that it will look at how to improve the working of the Apprenticeship Levy to support large and small employers in meeting the long-term skills needs of the economy. In the meantime, the government has said it will ensure that sufficient funding is made available in 2020-2021 to support an increase in the number of new high-quality apprenticeships in small and medium-sized businesses.

Neonatal Leave and Pay and Caring Responsibilities

The government has said it will create an entitlement to Neonatal Leave and Pay for employees whose babies spend an extended period of time in neonatal care. This will provide up to 12 weeks' paid leave to parents.

In addition, the government will consult on the design of a new in-work entitlement for employees with unpaid caring responsibilities, such as for a family member of dependants.

Employment Allowance and National Insurance Contributions

The government has said it will help small businesses to take on extra staff by delivering a commitment to increase the Employment Allowance to £4,000. This will mean businesses will be able to employ four full-time employees on the NLW without paying any employer National Insurance contributions.

Comments

Commentators have noted that the government's proposals to tackle the effects of coronavirus will do little to nothing to help organisations with 250 or more staff, nor will they help agency workers or the self-employed. The modest increase in the rate of SSP may not encourage eligible employees to take sick leave, which means employers still face tricky decisions about whether to offer full pay whilst employees are off sick for coronavirus or because they are self-isolating.

Whilst the proposals to increase the NMW to £10.50 an hour by 2024 has been widely welcomed, concerns have been expressed that the rise could disproportionately raise the costs of northern businesses and hit the social care sector hard if social care funding is not increased to meet this burden.

Michael Crowther View Biography

Michael Crowther

Solicitor
Leeds

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