After the general election with the new Labour government, you may be concerned about how payroll regulations might change. These laws dictate your work and the livelihoods of your employees. So, in this blog, we have decoded each party’s manifestos to find out what the future of payroll may look like.
When a new leader or party comes into power, certain parts of payroll and employment law are the first to be changed. These can include national insurance rates, student loan thresholds, parental leave and pensions.
The Labour Party
Labour claims that they will not raise the rate of National Insurance, also putting a stop to any long-term plans to stop the scheme. They also say they won’t increase the rates of VAT and income tax.
Labour also plans to match the minimum wage with the living wage in a bid to support lower-paid workers, also ensuring workers of any age have the same minimum wage amount. Their focus on lower-income workers also extends to their plans to scrap the controversial zero-hours contract.
The party also say they will create a two-tier employment status system, consisting of just ‘worker’ and ‘self-employed’. This change falls in line with the rise of the gig economy, giving those in alternative working arrangements more solid rights.
For businesses, Labour has pledged to cap corporation tax at 25%. However, depending on evolving circumstances and the tax rates in other countries, this might change. This approach is common throughout their manifesto, focusing on moving with the ever-changing economy.
Additionally, the Labour Party aims to strengthen worker protections. It also wants to improve collective bargaining rights. This could lead to better union negotiations. It may bring higher wages and benefits for employees. The measures aim to reduce income inequality and provide workers with more stability. Yet, businesses may need to adapt their payroll processes. They must do so to comply with new rules and agreements.
Labour also proposes extending statutory sick pay. It will include those earning below the Lower Earnings Limit. This will ensure more workers can benefit from this support. They plan to enforce mandatory reporting on the ethnicity pay gap. This is similar to gender pay gap reporting. It aims to address pay disparities among different ethnic groups. These initiatives are part of a bigger effort. The effort aims to promote fairness and inclusivity at work. They may require payroll departments to adjust reporting. They must do so to meet new standards.
All businesses see election years as a busy time. The changes can hugely impact their future. But there are ways HR and payroll professionals can go into these changes feeling prepared.
The most important part of preparation is being empowered with knowledge. As professionals in this field, you may need to advise or inform your employees. So, having a thorough understanding of what the future might hold is important. This can be achieved through industry newsletters and professional networks.
Having software and processes that can adapt to changes is important. With new legislation on the horizon – and most parties wanting to make changes within the first 100 days – it is important that your systems can handle them. Reviewing the capabilities and ensuring you install any updates is vital.
Any successful business runs on collaboration and good communication. So, keep employees informed of any changes that might affect them. They lead busy lives and as a specialised professional, it can help to build trust if you share any updates with them. It is also important to collaborate and liaise with legal professionals if any changes arise. This can help you to better understand any updates and implement changes seamlessly.
Payroll departments should also prepare for potential administrative burdens. They can do this by streamlining processes and ensuring compliance with new rules. This might involve updating payroll software. It also means training staff on new laws and revising payroll policies. By addressing these changes early, businesses can ensure a smooth transition. They can also avoid penalties or disruptions.
The 2024 election has the potential to bring significant changes to payroll processes and regulations. So, HR professionals must stay informed about potential legislative changes and be prepared to adapt their payroll systems accordingly.
Assad founded Phase 3 in 2004 and is responsible for the strategy, growth and finances of the business.
