There were, however, two elements which directly affect employers – the extension of IR35 “off-payroll” rules to the private sector, which will give many large and medium-sized organisations a headache, and some positive tweaks to the apprenticeship system.
There was also some welcome investment in mental health services which, while not directly HR-related, demonstrate a continued positive shift in attitudes to mental health and may give employers pause for thought over their own levels of support for mental health and well-being.
IR35 Regulations – a complex headache for employers
Battling tax avoidance remains a priority for a government increasingly under pressure to balance the books. In an effort to address the millions of pounds thought to be going down the drain in the public sector through tax avoidance involving so-called “off-payroll working”, the government introduced the controversial IR35 regulations in April 2017.
Before the regulations were introduced, public sector workers who were self-employed contractors were required to determine their own national insurance and income tax status and make the appropriate arrangements. IR35 shifted this responsibility to employers – requiring a whole new regime of stringent employment checks.
The Treasury obviously feels that this has had a positive effect in tackling non-compliance, as the Chancellor moved this week to bring parts of the private sector under the same regime. The stakes are high because incorrectly identifying people as an employee, worker or self-employed carries a risk of significant financial penalties.
The consultation over this change has been fairly fraught, with the construction sector in particular very keen to prevent roll-out of the regulation changes in April 2019 as proposed, arguing that the full impact on the public sector is not yet known.
It seems the government has at least listened to these concerns, announcing that the changes will be delayed until April 2020 and, crucially, only applied to large and medium-sized businesses. Those businesses affected are also promised some help in getting to grips with implementation, although what form that will take remains to be seen.
I would strongly advise that employers should make themselves aware of the changes now and begin to get their checking and administration procedures in place well ahead of 2020. Organisations may also need to seek advice on employment contracts to ensure they comply with the new rules in good time.
Apprenticeships – good news for small employers and therefore larger ones too
The government continues to place great importance on apprenticeships, but relatively low take-up, particularly among small businesses, has been blamed on the levels of contributions from employers being pitched too high.
Credit then, to Philip Hammond for dipping into his pocket to make tweaks to the apprenticeship system in the hope of making it more attractive to smaller employers.
Under the current regime, small and medium-sized employers who are not eligible for the levy will see their training contributions halved. This brings down the contribution from 10% of the cost of training to 5%. The move has been welcomed by Mark Dawe, CEO of the Association of Employers and Learning Providers, as a way of enabling providers working with smaller businesses to offer more places to support young people.
At the same time, the Chancellor announced a rise in minimum wage for apprentices in April from £3.70 to £3.90 an hour – a larger rise by proportion than all other minimum wage groups.
I would agree that these are hugely positive changes for small businesses and note that the positive effects will be passed on to medium and large businesses because in the long run, they will benefit thanks to an improved pipeline of skilled employees making their way up through the workforce.
Mental health – more evidence of changing attitudes
In a move widely leaked ahead of the Budget, the Chancellor allocated a £2bn chunk of a previously-announced £20.5bn NHS funding boost to spending on mental health services.
The money will be spent on a range of measures including a new 24-hour mental health hotline, and special vehicles to treat people experiencing a mental health crisis.
While the measures are not directly related to employers, they are a welcome result of a continued shift to attitudes in mental health. I am a great believer that positive behaviours come from the top down, and hope that the increased focus on mental health will encourage employers to look at their own provisions for mental health and wellbeing in the workplace.
I am a huge advocate of flexible working, for instance, and most staff at Reality HR work this way. It can have huge benefits for employers in terms of productivity, reduced absence and positive office culture, as well as the obvious advantages for employees in being able to achieve better work-life balance and fit their working lives around family commitments.
by Sally-Ann Hall-Jones, CEO of Reality HR