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LEGAL VIEW By Rob Kelly


IN ASSOCIATION WITH:


SPRINGING INTO ACTION


All eyes will be on Rachel Reeves’ Spring Budget on March 26 with businesses especially interested in any new tax and enforcement policies that may be delivered by the chancellor.


Many are still reeling from her Budget announcement last November of the hike in employer National Insurance (NI) contributions that will kick in at the beginning of April – along with increases in the National Living Wage.


The NI rise is from 13.8 per cent to 15 per cent while there is a significant reduction in the threshold at which businesses start paying on a workers’ earnings – from £9,100 to £5,000.


Meanwhile, the National Living Wage will also increase from £11.44 to £12.21 per hour from April.


The 6.7 per cent rise – which is worth £1,400 a year for an eligible full-time worker – was described by the Labour government as a “significant step” towards delivering its manifesto commitment to make sure “the minimum wage is a genuine living wage”.


The National Minimum Wage for 18 to 20-year- olds will also rise from £8.60 to £10 an hour – the largest increase in the rate on record. The £1.40 increase will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500.


The minimum hourly wage for an apprentice will


also rise, with an 18-year-old in an industry like construction seeing their minimum hourly pay increase by 18 per cent, a hike from £6.40 to £7.55 an hour.


And if all that wasn’t challenging enough, looming in the background is the new Employment Rights Bill (ERB), a landmark piece of legislation that will reshape the way businesses think about workers’ rights in the UK, setting out a total of 28 individual reforms.


Business owners, particularly smaller ones, have voiced concerns over the double impact of higher wage bills and workers’ rights reforms.


Chris Worden, from business rescue experts Director First, says: “Wage increases can squeeze cash flow overnight - especially for small businesses. Directors need to plan ahead now, or they risk falling into arrears with staff, HMRC, or suppliers later in the year.


“Cash flow issues can escalate quickly - directors should monitor their finances closely and seek advice at the first sign of trouble.”


The government has declared ERB as “the biggest upgrade to workers’ rights in a generation”.


It says the bill is designed “to make work pay”. It will see a ban on what it describes as


Cash flow issues can escalate quickly – directors


should monitor their finances closely and seek advice at the first sign of trouble


There are fears that some businesses will struggle to cope. Mark Hague, partner and head of insolvency at law firm Farleys, says: “It’s no secret that businesses are struggling in the current economic climate and there’s predictions that more insolvencies are on the horizon.


“As always, our advice for businesses who are experiencing financial distress is to seek legal and insolvency advice early so you can discuss your options and find the best solution before it’s too late.”


“exploitative” zero-hours contracts, end fire and rehire, and introduce basic employment rights from day one.


The bill will make parental leave, sick pay, and protection from unfair dismissal a day one right for all workers – subject to probationary periods.


It will also make flexible working the default from day one for all workers and update trade union legislation, removing restrictions on trade union activity and simplifying the statutory recognition process.


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