Pay

Policy

Strengthen Statutory Sick Pay

In respect of Statutory Sick Pay (SSP), the Employment Rights Bill will:

• make SSP available from day one of absence, removing the three “waiting days” before it becomes payable (as is currently the case);
• remove the lower earnings limit on eligibility (currently average pre-tax earnings of £125 per week); and
• set the rate of SSP payable to employees at the lower of: (i) 80% of the average weekly earnings; or (ii) the current weekly rate of SSP (currently £118.75, but reviewed annually).

These changes will mean that low earners will become entitled to receive 80% of average weekly pay, where under the current law they are not entitled to SSP, and that SSP will be available for all employees from day one of sickness absence.

National Minimum Wage

The Government has promised to deliver a genuine living wage that accounts for the cost of living. It has changed the Low Pay Commission’s remit to factor in the cost of living when recommending minimum wage rates. It has also instructed the Low Pay Commission to narrow the gap between the minimum wage rate for 18-20 year-olds and the National Living Wage as a first step towards achieving a single adult rate.

As a result, the following changes to hourly rates were applicable from 1 April 2025:

• National Living Wage (21 and older): increased from £11.44 to £12.21
• National Minimum Wage (18 to 20-year-olds): increased from £8.60 to £10.00
• National Minimum Wage (16-17 year olds and apprentices): increased from £6.40 to £7.55
• Daily accommodation offset increased from £9.99 to £10.66.

The Government has announced that the National Minimum Wage hourly rates will increase again from 1 April 2026 as follows:

• National Living Wage (21 and older): from £12.21 to £12.71  
• National Minimum Wage (18 to 20 year olds): from £10.00 to £10.85  
• National Minimum Wage (16-17 year olds and apprentices): from £7.55 to £8.00 

Tax and National Insurance Contributions (‘NICs’)

Key changes in the 2024 Autumn Budget (on 30 October 2024) included:

• Income Tax and NIC personal allowance thresholds frozen until the 2028 deadline set by the Conservative Government.
• From April 2025, the rate of employer NICs was increased by 1.2 percentage points, from 13.8% to 15%.
• The Secondary Threshold – the per-employee threshold at which employers become liable to pay NICs on each employee’s salary was reduced from £9,100 per year to £5,000 per year from April 2025 until April 2028 and then will increase by CPI thereafter.
• The Employment Allowance also increased from £5,000 in April 2025 to £10,500 and is extended to all eligible employers by removing the £100,000 threshold for eligibility. Meaning that 865,000 employers will pay no NICs from this year.

The Autumn Budget on 26 November 2025 did not increase headline rates of taxes to income tax, NICs or Value Added Tax. However, some headline changes include that:

• The Government will maintain the freeze to income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals at their current levels for a further three years from April 2028 to April 2031.
• The Government will also maintain the current NICs secondary threshold for employer contributions from April 2028 to April 2031.   
• From April 2029, only the first £2,000 of pension contributions made by an employee each year through a salary sacrifice scheme will be exempt from NICs, where currently there is not a cap. Employer and employee NICs (but not income tax) will be charged in the usual way on salary sacrificed pension contributions above the £2,000 annual cap.   

Internships and Apprenticeships

The Government has indicated it wants to ban unpaid internships, except when they are part of an education or training course. The Government launched a call for evidence on 17 July 2025, which considers unpaid internships and internships paid below the National Minimum Wage, unpaid work trials, voluntary work, volunteers and work shadowing.

The Government has announced it wants to make changes to the funding of apprenticeships in England. As part of the Autumn Budget 2025, The Government announced that it will provide a £1.5 billion investment over the next three years in employment and skills support. This includes providing £820 million worth of investment to fund a new Youth Guarantee (read our article here for more) and £725 million for the Growth and Skills Levy to help support apprenticeships for young people, including a change to fully fund SME apprenticeships for eligible people under 25. The Budget document states that further details on these will be announced shortly. 

Tipping

New laws on tipping were introduced in October 2024, which regulate how employers allocate tips, gratuities and service charges among workers and eligible agency workers (see here for an article we wrote at the time). As part of this, employers are required to introduce a written tips policy where qualifying tips, gratuities, and service charges are paid on more than an occasional and exceptional basis.  

The Employment Rights Bill strengthens this by requiring employers to consult with either recognised trade union representatives or workers’ representatives or (where there are no representatives) workers directly affected by the policy before preparing a first draft tipping policy and when reviewing such policy. Any tips policy must also be reviewed every three years from first implementation. Employers will also be required to make an anonymised summary of the views expressed in the consultation available to all workers of the employer at the place of business where the tips policy applies.

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Timing and developments

Statutory sick pay

The Government has said that this measure will take effect in April 2026.

Minimum wage

Rates increased on 1 April 2025 and will increase again on 1 April 2026.

Tax and NICs

Timings vary but increases to employer NICs apply from 6 April 2025.

Unpaid internships and apprenticeships

Call for evidence launched on 17 July 2025 and closes on 9 October 2025. The Government anticipates publishing its response in Jan/Feb 2026, with any changes to follow thereafter.

Tipping

Included in the Employment Rights Bill. Consultation is anticipated in winter 2025/early 2026.The Government has said that measures in respect of tipping will take effect in October 2026.