Key employment law updates | November 2024

Welcome to our monthly update, where we share upcoming changes to employment.

Chancellor set to hike employers' National Insurance at Budget

Earlier this month, Chancellor Rachel Reeves published Labour's first budget since the Party came to power following the general election. The budget brought confirmation of the Government's plans to increase employer's National Insurance rates from 13.8% to 15%. Moreover, employers will start paying the rate on salaries of £5,000 per year, down from £9,100.

According to the Chancellor, these changes will provide £25 billion of extra funding for public services, such as the NHS. However, several employers have expressed concern at the rate increase at a time when businesses are already struggling to balance the books.

At the CBI’s Annual Conference, CEO Rain Newton-Smith referred to margins being squeezed and confirmed that nearly two-thirds of firms reported that the Budget will damage UK investment with half of firms looking to reduce headcount as a result. Whilst the changes being brought forward by the Employment Rights Bill remain under consultation, businesses considering making changes to headcount and resourcing are likely to take those forthcoming changes into account and start consulting with employees before the changes come into force. Where widescale change is needed, collective consultation rules will apply and businesses will need to make sure that they have complied with correct consultation procedures to avoid being hit by additional costs when making redundancies or other significant changes to terms and conditions.

Minimum wage to rise to £12.21 an hour next year

At the end of last month, the Government accepted the recommendations of the Low Pay Commission in full, increasing the National Minimum Wage, including the National Living Wage.

The new rates, applying from 1 April 2025, are as follows:

• National Living Wage (21 and over): £12.21 (6.7% increase)
• 18 – 20-Year-Old: £10.00 (16.3% increase)
• 16 – 17-Year-Old: £7.55 (18% increase)
• Apprentice Rate: £7.55 (18% increase)
• Accommodation Offset: £10.66 (6.7% increase)

This will be good news to those paid at minimum wage, but many employers, particularly in the hospitality, leisure and retail sectors are particularly concerned at the impact this will have on their operational costs. Others have warned that the move may make employers think twice before hiring younger workers.    

Gender pay gap in the UK

The Office for National Statistics recently published gender pay gap data for the UK in 2024. The data covers differences between men and women by age, region, full-time and part-time, and occupation.

The key points from this data are as follows:

• The gender pay gap in April 2024 stood at 13.1% among all employees (down from 14.2% in 2023) and the gender pay gap among full-time employees fell from 7.5% to 7.0%, the difference between the two figures being due to more women working part-time. 
• The gender pay gap is larger among high earners than among lower-paid employees;
• In April 2024, the gender pay gap was highest in skilled trades occupations and lowest in the caring, leisure and other service occupations; and
• In April 2024, the gender pay gap among full-time employees was higher in every English region than in Wales, Scotland, or Northern Ireland.

The gender pay gap has been slowly declining over time. In the past decade, it has fallen approximately a quarter amongst full-time employees.

The gender pay gap has been calculated as the difference between average hourly earnings (excluding overtime) of men and women, as a proportion of average hourly earnings (excluding overtime) of men's earnings.