As the 2024 General Election approaches, you may have some concerns 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. But, what would each party want to alter if they were elected?
If elected, 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.
Unlike the Labour Party, the Tories have a long-term goal to completely scrap National Insurance contributions. So, if elected, they aim to cut rates to 6% by April 2027. They say this change will increase take-home pay and reduce costs for businesses. The manifesto also includes increases to the National Living Wage in line with inflation. The Conservative party also claims they won’t increase the rates of two other key taxes: income tax and VAT.
For families, the Conservatives pledge to raise the income boundaries for a reduction in Child Benefits up to a combined £120,000. They also claim that they will freeze the number of council tax bands, undertake revaluations or cut any council tax discounts.
The third of the three main parties is the Liberal Democrats. In their ‘For a Fair Deal’ manifesto, they mention a commitment to stamping out tax avoidance. They also pledge to reverse the high levels of personal tax in recent years and stop tax cuts for big banks as well as oil and gas companies.
The party also wants to alter the employment status system. This would involve introducing a ‘dependent contractor’ status in between employment and self-employment. This has the potential to improve the rights of gig and freelance workers. The Lib Dems also want to put secure pension plans in place for the future of work – where portability between roles is important.
Unlike Labour, they wouldn’t scrap zero-hour contracts but would set a 20% higher minimum wage for those under them. This aims to cover the fluctuating nature of their hours. Those who have worked in these contracts (or under agency) for 12 months, would be entitled to request a fixed hours contract. For parents, the party aims to expand parental leave and pay, making it a day-one right for all employees.
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.
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.
Adam is our Head of Managed Services, managing the successful delivery of our payroll managed services to a range of clients.
