Pay

Policy

Strengthen Statutory Sick Pay

See the Day One Employment Rights and Unfair Dismissal section of the reform hub.

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 are now applicable from 1 April 2025:

• National Living Wage (21 and older) will increase from £11.44 to £12.21 an hour.

• National Minimum Wage for 18 to 20-year-olds will rise from £8.60 to £10.00 an hour.

• National Minimum Wages for Under 18s and Apprentices will increase from £6.40 to £7.55 per hour.
  
• Daily accommodation offset will increase from £9.99 to £10.66.

Tax and National Insurance Contributions (‘NICs’)

The Labour Party’s manifesto said that there would be no increase to NICs, the basic, higher, or additional rates of Income Tax, or VAT.

The Autumn Budget on 30 October 2024 announced:

• No increases to Income Tax Rates (basic, higher or additional rates).
• No increases to employee NICs or VAT.
• Income Tax and NIC personal allowance thresholds will remain frozen until the 2028 deadline set by the Conservative Government. From April 2028, these will be uprated in line with inflation.
• The rate of employer NICs has been increased by 1.2 percentage points, from 13.8% to 15% from 6 April 2025.
• The Secondary Threshold – the per-employee threshold at which employers become liable to pay NICs on each employee’s salary has been reduced from £9,100 per year to £5,000 per year from 6 April 2025 until 6 April 2028 and then will increase by CPI thereafter.
• The Employment Allowance has also increased from £5,000 to £10,500 on 6 April 2025 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.

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. The Government plans to replace the existing apprenticeship levy with a new growth and skills levy – but details are awaited.

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

Minimum wage

New rates increased on 1 April 2025.

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.