This is an update to our previous article (How the Autumn Budget 2024 Impacts Employers and Employees) to factor in the new rates in relation to family friendly payments which have now been published.
The rate changes will include:
New rates for the National Living Wage (NLW) and the National Minimum Wage (NMW) that will apply from 1 April 2025 were announced in the 2024 Autumn Budget delivered on the 30th October 2024. These rates will be as follows:
- For the NLW for workers aged 21 and over, the rate will increase by £0.77 per hour (6.7%) from £11.44 per hour to £12.21 per hour.
- For the NMW for workers aged 18-20, the rate will increase by £1.40 per hour (16.3%) from £8.60 per hour to £10.00 per hour.
- For workers aged 16-17, the NMW and Apprentice rate will increase by £1.15 per hour (18.0%) from £6.40 per hour to £7.55 per hour
New rates for statutory payments which were announced by the Government on 21 November 2024, and will apply from the 6 April 2025. These rates will be as follows:
- Statutory maternity pay – entitlement to receive it for 39 weeks at a rate of 90% of the gross weekly pay per week, subject to a maximum of £187.18 per week (up from £184.03 per week) after the first 6 weeks. The position for the first 6 weeks remains unchanged.
- Statutory paternity Pay – the lesser of £187.18 per week (up from £184.03 per week) or 90% of the average weekly earnings per week.
- Statutory shared parental pay – the lesser of £187.18 per week (up from £184.03 per week) or 90% of the average weekly earnings per week.
- Statutory adoption pay – entitlement to receive it for 39 weeks at a rate of 90% of the gross weekly pay per week, subject to a maximum of £187.18 per week (up from £184.03 per week) after the first 6 weeks. The position for the first 6 weeks remains unchanged.
- Statutory parental bereavement pay – the lesser of £187.18 per week (up from £184.03 per week) or 90% of the average weekly earnings per week.
- Statutory sick pay – entitlement will rise from £116.75 per week to £118.75. Under the proposed Employment Rights Bill (see our article: “New Employment Rights Bill: Key Implications for Employers”), sick pay could soon be payable from the first day of absence, as opposed to only being payable after 4 days of sick leave, currently, but this will likely not be in effect by next April.
The earnings threshold for these payments, except for maternity pay will also go up from £123 to £125 a week. The threshold for maternity allowance will remain at £30 per week.
How these increases impact business owners
Higher minimum wages and increased statutory payments mean your overall employment costs are going up, in addition to the national insurance employer contributions which is set to have a significant impact on employers.
For businesses particularly in hospitality, retail, and care, where many employees are on lower wages, these increases will add pressure.
For small and medium-sized enterprises who often have less financial resources to absorb changes like this, it might mean tough choices about pricing, staffing levels, or even cutting back on other expenses.
However, higher wages could attract better talent, reduce staff turnover, and ultimately improve productivity.
The increase in the statutory sick pay could affect businesses if you have a high rate of absenteeism - your costs for covering sick leave will grow. Tracking and managing these payments may require updates to your payroll systems. On a more positive note, if employees are paid from day one of sickness absence, it should work to reduce presenteeism in the workplace (i.e. people coming to work when they are unwell) and spreading germs more widely amongst the workforce.
To manage this, consider reviewing your sickness policies and encouraging a healthy working environment to minimise absenteeism.
How we can help
To help incorporate these changes, you should have clear policies in place, including a Sickness Absence Policy and family leave policies.
For assistance in navigating and incorporating these changes, please don’t hesitate to contact Christine Caffrey by emailing christine.caffrey@salaw.com, or by calling 01727798021.
