Autumn Budget – what employers need to know

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It’s with an optimistic outlook that the Chancellor set out the government’s spending priorities. The 2021 Autumn Budget, he said, begins the work of “preparing for a new economy post-Covid” – one of “higher wages, higher skills, and rising productivity”.

He shared encouraging employment statistics. The UK unemployment rate peaked at 5.2% in the three months to December 2020, which was less than predicted. The number of employees has grown for ten consecutive months: there are now more paid employees than before the pandemic, and vacancies are at a record high. At the same time, the number of employments furloughed fell to 1.3 million at the end of August, around 1.2 million fewer than the March 2021 forecast.

As we continue to recover from the pandemic, the Chancellor also made several announcements that directly concern employers. Here’s how.

Scale-Up Visa

The government is launching a “Global Talent Network” and introducing a new “Scale-Up Visa” to proactively find and bring talented people to the UK in key science and technology sectors. This visa should facilitate and speed up the process for UK-based businesses looking to recruit highly skilled workers in these key sectors. It will be available from Spring 2022, for workers who received a high-skilled job offer from an eligible business with a salary of at least £33,000.

What this means for you: If you’re interested in recruiting via this new visa, first you need to check if your business is eligible. It’s also important to make sure you carry out the appropriate “right to work” checks, or you could accidentally hire someone illegally. Our business immigration team can help – find out more here.

National Living Wage

On 1 April 2022, the National Living Wage will rise by 6.6% to £9.50 an hour. Young people and apprentices will also see increases in the National Minimum Wage rates:

  • increasing the rate for 21- to 22-year-olds by 9.8% from £8.36 to £9.18 per hour
  • increasing the rate for 18- to 20-year-olds by 4.1% from £6.56 to £6.83 per hour
  • increasing the rate for 16- to 17-year-olds by 4.1% from £4.62 to £4.81 per hour
  • increasing the rate for apprentices by 11.9% from £4.30 to £4.81 per hour
  • increasing the accommodation offset rate by 4.1% from £8.36 to £8.70 per hour

What this means for you: As an employer, you need to ensure that your pay scales comply with the new rates from April 2022 in order to avoid HMRC investigations, potential penalties, and tribunal claims – which ultimately result in bad publicity for businesses that fall foul of the Regulations.

National Insurance

As announced in September this year, the Chancellor confirmed that National Insurance rates will rise by 1.25 percentage points from April 2022. This measure, part of the Health and Social Care Levy Bill, aims to help the NHS to tackle the ongoing health & social care crisis.

For the fiscal year 2022-2023, the government will use the September Consumer Price Index figure of 3.1% as the basis for uprating National Insurance limits and thresholds, and the rates of Class 2 and 3 National Insurance Contributions. Currently, employees above state pension age do not pay National Insurance, but the Levy Bill is also proposing to change this from April 2023.

What this means for you: This means that both you and your employees will contribute more on wages and staff contributions.

Access to justice

To increase capacity and efficiency across the courts system, and recover from the impacts of COVID-19, the government is investing over £1 billion – including £324 million to increase capacity in the civil, family and tribunal jurisdictions to continue tackling backlogs and improve timeliness.

What this means for you: The rise in employment tribunal claims was an issue before COVID – and the pandemic has created even more backlog and waiting times. So, while this further investment is a relief, the obvious thing to do is to avoid going to a tribunal in the first place: it’s costly and disruptive. If you are experiencing issues with employees, we can help. Find out more here.