'HR headaches' | Gov's mini-budget could 'drastically' change things for your workforce

Gov's mini-budget could 'drastically' change things for your workforce

HR and business experts have weighed in on last week’s mini-budget, with one warning that the announcement could have a "drastic" impact on one of HR’s most important remits.

Chancellor Kwasi Kwarteng outlined several key changes on Friday morning, with the headlines largely taken up by the controversial decision to scrap the cap on bankers’ bonuses and reduce the income tax rate for the UK’s highest earners.

However, there were also key announcements that will significantly impact employers – not from a tax and operational perspective – but in the rights of their workforce and their obligations as an employer, since employment laws derived from the EU are now all subject to change or removal. This includes:

  • Working Time Regulations

  • TUPE

  • Part-time and fixed-term worker regulations

  • Agency Worker regulations

Alan Price, CEO at BrightHR, said: “Ever since the UK voted to leave the EU, we’ve been waiting for guidance from the government on how our current employment laws will change.

“Probably the most significant announcement in terms of the future shape of UK laws was the introduction of a Retained EU Law (Revocation and Reform) Bill. This requires government departments to review then retain or replace ALL EU derived law. Any laws that are not formally retained will automatically expire on 31 December 2023.

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“Reviewing these laws is a huge task and we can expect changes to almost every area of business and society. Of course, many laws are expected to remain the same and the UK is already one step ahead since, even whilst we were still part of the EU, domestic legislation was introduced which enhanced EU minimum requirements. For example, the EU mandates all workers to get at least 4 weeks’ paid annual leave, but the UK requires employers to provide at least 5.6 weeks’ paid annual leave. The key difference now is that the UK will have flexibility to set entitlements as they wish, so could, theoretically, set a new minimum entitlement to 2 weeks’ paid annual leave, lower than the EU’s threshold.

“All employers should put this date in their diary now and make sure that they are prepared for any changes that are announced before the deadlines, as well as knowing which laws will automatically expire after it. It’s important to highlight that over the next 15 months, we will likely see a stream of updates, which employers will have to track and manage accordingly, creating a whole new HR headache."

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Price concluded: “This is a time of change and concern for many business owners. It’s important to stay on top of the ever-changing legislation in order to remain fully compliant. Failure to do so could mean organisations are wrongly following out-dated laws, leading them to breach their legal obligations and withhold statutory entitlements which, in turn, could lead to tribunal claims and widespread discontent.”

National Insurance rise scrapped

Kwarteng confirmed that the rise in National Insurance contributions, which was announced earlier this year, will be reversed. On this reversal, Ben Willmott, head of public policy for the CIPD, the professional body for HR and people development, commented: “The Government's decision not to push ahead with the planned increase to employer National Insurance contributions will be a huge relief to many employers.

"We’d urge employers, where they can, to reinvest this back into supporting their people at this difficult time. Some employers have already told us they intend to use the money that would have been spent on this to help their employees during the cost of living crisis. For example, by funding a higher pay rise, a one off cost-of-living bonus, or other financial wellbeing benefits such as an increase in employer pension contributions.”

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Nicky Owen, Partner at Crowe UK, Professional Practices commented: “Reversal of the 1.25% rise in National Insurance Contributions is happening from 6 November; any reduction in people costs will always be welcomed.

“With the current shortage of talent that firms are currently experiencing, this reduction is unlikely to be noticed.

“People costs are rising as firms hike up salaries in a bid to recruit and retain talent and compensate for loss of talent.

“HR teams are looking for innovative ways in which to recruit and retain people. Firms need to understand the motivators for their people and provide ever more flexible and bespoke packages.”

‘Energy bill relief could save thousands of jobs’

Under the Energy Bill Relief Scheme announced by Kwarteng, wholesale energy prices will be capped for all organisations for six months from October 1.

CIPD’s Willmott commented: “The Energy Bill Relief Scheme will support the ongoing viability of many firms over the winter and no doubt save thousands of jobs. However, it’s crucial that the Government is ready to extend this beyond the initial six months and provide targeted assistance to employers under the most pressure if energy costs remain very high levels or spiral further. As we learnt with furlough, it’s vital businesses have a clear view of what support will be available to them in good time so they can make the right decisions for their organisation and avoid unnecessary job cuts.”

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