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| Employment Newswatch |
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Pre-Budget Report
In December 2009, the Government announced a package of measures with important implications for employers.
These include:
- a new 50% top rate of tax will apply to employees with an income of over £150,000 per annum;
- pensions relief will also be limited for anyone whose annual salary is over £130,000;
- the personal allowance on Income Tax will be frozen during 2010-11, and there will be no change to the higher rate threshold (so that income tax will continue to be paid at 20% on income up to £37,400, and then at 40% up to £150,000);
- Employers' National Insurance Contributions ('NICs') will increase by 0.5%, which is a rise from 12.8% to 13.5%;
- for Class 1 (employee), Classes 1A and 1B (payments by employers on benefits) and Class 4 (self-employed) workers, NICs will increase from 8.5% to 9.5% on earnings between the primary threshold and upper earnings limits;
- in addition, for Classes 1 and 4, the additional rate for NICs on earnings over the upper thresholds will go up to 2% from 1%;
- workers with salaries of less than £20,000 will not face a rise in NICs; and
- public sector pay settlements are to be capped at 1% for two years from 2011.
Gender pay gaps
The Government would like employers from all sectors to report on pay gaps on a voluntary basis. However, the Government has included provisions in the Equality Bill which may, if implemented, compel employers to report pay gaps.
The Equality Commission have devised a 'toolkit' which sets out its recommendations for carrying out an audit. which encourages employers to include all staff; to collect pay data including benefits; and where gaps are identified, to devise an action plan to tackle them. However, employers should be mindful that if a gender pay gap is identified and they do not attempt to resolve it, then it may leave them exposed to the risk of sex discrimination claims.
Pensions - are you ready?
The Department for Works and Pensions will be introducing a pensions auto-enrolment scheme between October 2012 and October 2016, starting with large and medium sized employers.It is likely that employers will need to make changes to their current arrangements in order to comply with the new requirements. Employers should look at their schemes to review whether they comply. Companies should check pension entitlements in the employment contracts of their staff, as the new scheme may have an impact on pension benefits. Also under the Pensions Act 2008, agency workers may be included under this new scheme, so employers may also have to make contributions towards their pensions.
The information in this note is intended to be general information . It is not to be relied on as legal advice nor as an alternative to taking professional advice.
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