Given the current climate much of the budget focussed on the outbreak of COVID-19, but there are several other measures that will affect the pay and reward profession.
National Living Wage
The government announced a new, ambitious target for the National Living Wage (NLW) to reach two-thirds of median earnings and be extended to workers aged 21 and over by 2024, provided economic conditions allow. Based on the latest OBR forecast, this means the NLW is expected to be over £10.50 in 2024.
This builds on the 6.2 percent increase of the NLW to £8.72 an hour that takes effect from this April, meaning the government is on track to meet its current target of 60 percent of median earnings by 2020.
The government said it is committed to reducing taxes on peoples’ wages. The budget confirmed a tax cut for 31 million working people with the increase in the National Insurance contributions (NICs) thresholds for employees and the self-employed, saving the typical employee around £104 and a typical self-employed person around £78 in 2020-21.
Taken together with increases to the NLW and to the Personal Allowance, an employee working full-time on the NLW anywhere in the UK will be over £5,200 better off compared to April 2010.
The government wants to ensure that the UK continues to be attractive to investment and remains a dynamic environment to start and grow a business.
To cut the cost of taking on staff the government is increasing the NICs Employment Allowance to £4,000, benefiting 510,000 businesses.
The government will shortly consult on the design of Carers’ Leave: a new in-work entitlement for employees with unpaid caring responsibilities, such as for a family member or dependents. This will support hardworking people to balance their caring responsibilities with work, particularly women who disproportionately undertake unpaid caring activities.
Neonatal leave and pay
The budget announces a new entitlement to neonatal leave and pay for employees whose babies spend an extended period of time in neonatal care. Employed parents whose babies spend an ’extended period’ in neonatal care will be entitled to paid leave of up to 12 weeks.
The government is announcing a service improvement that will make Tax-Free Childcare (TFC) compatible with school payment agents. This will allow parents of up to 500,000 school-aged children across the UK to access TFC and use it towards the cost of their wraparound childcare.
The budget confirms the end of the benefits freeze and continues the rollout of Universal Credit to support the most vulnerable in society, with extra help for parents of sick or premature babies, carers and victims of domestic violence.