Legal update
Key takeaways from the Budget and the latest on the Employment Rights Bill
Amendments to the Employment Rights Bill
On 28 November 2024, amendments to the Employment Rights Bill were proposed by the Government. Many of the changes are minor but a couple of key amendments stand out:
Increasing time limits for employment claims
The time limit for bringing claims in the Employment Tribunal is to be extended from three months to six months. This would be a significant change in the law and, although some commentators suggest it allows more time to settle disputes, in our view it will inevitably lead to a rise in the numbers of employment claims being brought, placing extra pressure on what is already a severely stretched system.
Unfair dismissal from day one
Our previous note commented on protection from ordinary unfair dismissal being available from day one on the job, but we noted that employers would still be able to fairly dismiss employees during what Government termed as an “initial period of employment”. The amendments to the Bill confirm the initial period must be between three and nine months.
The 2024 Autumn Budget
Below we summarise the key employment-related announcements from the Chancellor’s 2024 Autumn Budget:
Increase in rates of employer National Insurance contributions
From 6 April 2025, the rate of employer National Insurance contributions (“NICs”) will increase from 13.8% to 15% and the threshold from which employers become liable to pay NICs on employees’ earnings will reduce from £9,100 to £5,100.
In an effort to mitigate the impact of the increased costs to small business,
the NIC employment allowance is being increased from £5,000 to £10,500 and the current £100,000 eligibility threshold (restricting the employment allowance to employers with a National Insurance bill of less than £100,000 in the previous year) is being removed, meaning all eligible employers will benefit from the allowance.
Changes to National Minimum Wage and other statutory payments
Payrolling benefits
From April 2026, employers must payroll all benefits in kind, except for employment related loans and accommodation. This will almost eliminate the need for submitting P11D forms.