From April 2025, significant updates to UK employment laws and National Insurance Contributions (NICs) will come into effect. These changes will impact wages, statutory payments, leave entitlements and employer tax obligations. For farmers who employ staff, understanding these updates is essential to ensure compliance and manage employment costs effectively.
1. National Minimum and Living Wage Increases
From 1st April 2025, the National Living Wage (NLW) and National Minimum Wage (NMW) rates will rise, meaning higher payroll costs for agricultural businesses. The updated rates are as follows:
- National Living Wage (21+): £12.21 per hour (+6.7%)
- National Minimum Wage (18–20): £10.00 per hour (+16.3%)
- National Minimum Wage (16–17 & apprentices): £7.55 per hour (+18%)
For farmers employing seasonal or full-time staff, these increases must be factored into labour budgets to remain compliant and avoid penalties for underpayment.
2. Increases to Employer National Insurance Contributions (NICs)
Alongside wage increases, changes to employer NICs will further impact labour costs.
- Employer NIC Rate Increase: The current 13.8% rate will rise to 15% for secondary Class 1 NICs.
- Lower Earnings Threshold: Employers will start paying NICs on employee earnings above £5,000, down from the current £9,100.
- Increased Employment Allowance: To offset these costs, the Employment Allowance (which reduces NIC bills for smaller businesses) will increase from £5,000 to £10,500 per year.
How This Affects Employers
With both NIC rate increases and a lower threshold, farm businesses employing staff will see an increase in their tax burden. However, the higher Employment Allowance may help smaller farms mitigate some of these additional costs. Employers should review payroll structures and ensure they are taking full advantage of available allowances.
3. Changes to Statutory Sick Pay and Family Leave Pay
From April 2025, statutory payments will also rise:
- Statutory Sick Pay (SSP): £118.75 per week
- Statutory Maternity, Paternity, and Shared Parental Pay: £187.18 per week
Payroll systems must be updated accordingly to ensure all payments align with these new rates.
What employers need to do now:
- Budget for higher wages and employer NICs.
- Ensure payroll systems are updated for wage and statutory payment increases.
- Review NIC eligibility for Employment Allowance to reduce costs.
- Update paternity leave policies to reflect new legal requirements.
- Seek professional HR or financial advice if planning redundancies or contract changes.
By taking proactive steps now, farmers can ensure compliance, manage labour costs effectively, and support their workforce in line with the latest employment laws.
For further help and advice, please contact our HR team on 01981 590514.
