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The issues from the budget keeping your employer awake at night

Here we collate and analyse the main issues

The 2016 budget is firmly lodged in the collective consciousness due to the resignation of former work and pensions secretary Iain Duncan Smith over cuts to disability benefits and the wider disarray in the Conservative party ranks over the upcoming European referendum; however, there is a risk of the actual details of the budget being forgotten about or glossed over, particularly when it comes to changes that will affect employers.

Apprenticeship levies and contributions

First announced in the 2015 autumn statement, businesses spending more than £3m on wages will have to pay a levy of 0.5 per cent from April 2017 to help fund apprenticeships. Employers eligible for the levy need not worry, however, as the government has announced that these businesses will receive a top-up of 10 percent on their monthly contributions from the government, which the employer can spend on providing apprenticeships and training.

Small- and medium-sized enterprises are exempt from the levy; however, they can expect to see benefits from government policy developments aimed at boosting funding and improving standards of apprenticeship training. Employers can expect specific details to be released between now and June 2016.

The new national living wage

The new national living wage, which came into force on 1 April 2016, applies to workers over the age of 25 and entitles them to basic pay of £7.20 per hour. Analysts have suggested that employers could minimise the effects on their bottom line by employing people aged 24 and under; however, the minimum wage for workers aged between 21 to 24 will increase from its present £6.70 to £6.95 per hour in October 2016, offsetting potential savings. Employers should also be aware that not employing people due to their age could constitute age discrimination.

Business analysts have also noted the recent growth in self-employment, with almost 15 per cent of the workforce now registered as self-employed. Recent research from the Social Market Foundation indicates that over 1.7 million self-employed workers will continue to earn less than the national living wage upon its introduction, meaning that a sizeable proportion of the workforce will not benefit.

Employers could enlist the services of self-employed contractors rather than formal employees to minimise the effects of the national living wage; however, care is vital to ensure that contractors are not technically viewed as employees under the terms of the law. Failing to pay the minimum wage when employees are eligible carries penalties of up to £20,000 for employers.

Shared grandparental leave

It was indicated at the 2015 Conservative party conference that eligibility for shared parental leave could be expanded to include grandparents. The first consultation, which is scheduled for May 2016, will also examine the possibility of rationalising the present parental leave system. In practice, this could mean changes to the requirements regarding employer notification, which is likely to be welcomed given the notoriously complex nature of the current system.

It is already clear that any changes for grandparents will be supplemental to the present right to request a flexible working arrangement. Employees with 26 weeks’ work under their belts can currently request flexible working, including grandparents specifically for the purpose of assisting with childcare for their grandchildren.

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