News

The "Emergency" Budget - Impact on Employers

23/06/2010

The Chancellor’s ‘emergency’ Budget includes a number of factors that impact on business and the public sector. We outline the key measures below.

National Insurance – the threshold at which Employers start to pay national insurance will rise by the rate of inflation plus £21 per week from April 2011

Basic state pension to be linked to earnings from April 2011. Pension guaranteed to rise in line with earnings, prices or 2.5%, whichever is the greater.
The government will accelerate the increase in state pension age to 66 - a "call for evidence" will be made later this week.
The government will also consult on phasing out the default retirement age - to ensure those who want to work past 65 are able to do so.
Former Labour Work and Pensions Secretary John Hutton has been asked to review public sector pensions. His report is expected before the autumn spending review.
From 2011 the majority of employee benefits will rise in line with the Consumer Price Index rather than the Retail Prices Index. This is reported to save more than £6 billion a year
Public Sector bosses are not to be paid any more than x20 those lowest paid workers within the organisation
Any public sector worker earning more than £21k will face a two-year pay freeze. Those who earn less than £21k will receive a flat annual pay rise of £250
Personal allowance before tax rises to £7,475 in April 2011
Finally positive news for entrepreneurs in our region – New start up businesses will be exempt from £5,000 of NI contributions for the first 10 workers this should be in place by September

Robert Gibson - Head of Employment Law