PIXIE PAYROLL Blog

Our regular blog readers will know that we always write a post after the big government financial events, which tend to happen twice a year. The main Budget is in the autumn and at this time of year, it’s the Spring Statement. This statement doesn’t often bring with it any major changes to payroll-related measures and this time is no exception. Any changes, such as the increase in employers’ national insurance, were announced last autumn and you can find the blog about that here.

National Living and National Minimum Wage

The Chancellor confirmed in the Statement that the National Living Wage and National Minimum Wage will be increasing from next week. The National Living Wage (NLW) will rise by 6.7% to £12.21 per hour and the National Minimum Wage will increase to £10 per hour. This increase translates to an approximate annual pay rise of £1,400 for full time workers on NLW.

Welfare and Benefits

With the economy still not performing as well as hoped and with the growth forecast for this year lowered again, the Chancellor announced further cuts to some welfare benefits such as a freeze in health-related universal credit for new claimants and a slightly reduced reduction in the universal credit allowance.

The changes to the eligibility criteria for personal independence payments were announced last week and as Pip can be claimed by working people, this may have an impact on employees, increasing financial stress and potentially impacting productivity. Some employers might consider enhancing employee assistance programs to support their employees – our blog last month covered EAPs.

Payroll changes The start of the new financial year next week will have implications on employers’ payrolls in two ways – the new wage rates and the increase in the portion of national insurance that employers have to pay. These will add costs to businesses and so we have been working with our clients to ensure they have a clear picture of that, so they go into the 2025/26 tax year equipped with the information they need.

We’ve talked a lot in previous blog posts about how employers have a vital role to play in supporting their employees’ mental health and wellbeing. Whether it’s ensuring good mental health at work, supporting requests for flexible working or granting compassionate leave, employers make a significant contribution to good mental health of their staff.

Another way an employer can help their employees is to put an Employee Assistance Programme (EAP) in place, to provide confidential, professional help for employees facing a range of issues.

What is an Employee Assistance Programme?

An EAP is a workplace benefit designed to offer employees access to professional support and guidance on various personal and work-related issues. These programmes typically include services such as counselling, legal and financial advice, health assessments, and even managerial support for employers. The goal is to enhance employee well-being, improve productivity, and reduce absenteeism.

In general, offering an EAP is a non-taxable benefit provided it is offered to all employees although there are some exceptions so getting some advice might be worthwhile.

What can it offer?

EAPs can support both the employees and employers in several ways. For employees, it can offer:

Mental Health and Well-being Support

Mental health challenges such as anxiety, depression, and work-related stress are on the rise. EAPs provide employees with access to confidential counselling and psychological support, helping them manage their mental well-being effectively.

Legal and Financial Advice

Many EAPs provide employees with access to legal experts and financial advisors, helping them address issues such as debt management, legal disputes, or family matters.

An EAP can also support employers by:

Improved Workplace Productivity

Employees who struggle with personal or work-related problems may experience reduced productivity. By offering professional assistance, EAPs help employees deal with their issues, enabling them to focus better at work.

Reduced Absenteeism

Unresolved personal and health issues often lead to increased sick leave or absence. EAPs can reduce this by offering timely support and interventions.

Support for Managers

Managing a team can be challenging, especially when dealing with employees facing personal difficulties. EAPs offer managers guidance on handling sensitive situations effectively and legally.

How Do EAPs Work?

EAPs are generally offered through an external provider, ensuring confidentiality for employees who use the service. Employees can access support via a helpline, face-to-face counselling, online resources, or even mobile apps. These services are free to employees, as they are covered by the employer.

Most EAPs operate 24/7, allowing employees to seek help whenever they need it. Employers receive anonymised reports on usage trends, helping them understand workforce challenges without compromising confidentiality.

Employee Assistance Programmes can play an important role in supporting an employer’s workforce. As mental health awareness grows, investing in an EAP is a proactive step that benefits both employees and employers. It can also help recruitment by making the workplace as desirable place to work as it could make for a healthier, more productive work environment where employees feel valued and supported.

A couple of years ago, we wrote a blog post about parental leave (which you can read here) and we included a couple of lines in it about adoption leave. But because it’s an important subject, we thought it would be interesting to look at it on its own.

Adoption leave was introduced so that a family adopting a child (or having a child via a surrogate) would have the same rights and opportunities as birth parents. The leave allows adoptive parents with time off work to bond with their new child and adjust to their expanded family as well as providing financial support during this important time.

Who is eligible for Adoption Leave?

To qualify for adoption leave, the new parent or parents must be an employee (i.e. not a contractor or self-employed) and have been matched with a child for adoption through an approved adoption agency. This includes adoptions from within the UK and from abroad. Adoption leave is also available to local authority foster parents who are prospective adopters under the “fostering for adoption” scheme.

The entitlement applies to both single and joint adopters. However, if two people are adopting together, only one can take adoption leave, while the other may be eligible for paternity leave or shared parental leave. To claim adoption leave, the employee must notify their employer of their intention to take leave within seven days of being matched with a child (or as soon as reasonably practicable), so the employer may get far less notice of a prolonged absence than they would with Maternity or Paternity Leave.

How long does Adoption Leave last?

If an employee is eligible, they can take up to 52 weeks of adoption leave. This leave is divided into two parts: 26 weeks of Ordinary Adoption Leave (OAL) and 26 weeks of Additional Adoption Leave (AAL). Adoption leave can begin from the date the child starts living with the adoptive family or up to 14 days before that date.

Statutory Adoption Pay (SAP)

Statutory Adoption Pay can be paid to employees during their time on leave. To qualify, the employee must have been continuously employed by their employer for at least 26 weeks by the week they are matched with a child and earn an average of at least £123 per week (as of the 2024/25 tax year).

Statutory Adoption Pay is paid for up to 39 weeks and is paid in two ways. For the first six weeks of leave, the employee is entitled to 90% of their average weekly earnings and then for the remaining 33 weeks, they are entitled to £184.03 per week (or 90% of the employee’s average weekly earnings, whichever is lower).

As we have mentioned with other kinds of statutory pay, the employer can choose to top up the employee’s pay to their normal rate.

Rights During Adoption Leave

Employees on adoption leave retain the same employment rights as if they were working. This includes accrual of holiday entitlement, protection from unfair dismissal, and the right to return to the same or a similar job after leave. If an employee’s role is made redundant during adoption leave, they must be offered a suitable alternative role where available.

Shared Parental Leave

The option for Shared Parental Leave is also available for adoptive parents if they wish to share the 52 weeks of leave and 39 weeks of pay between themselves.

Adoption Leave is a really important statutory benefit for families who are often welcoming children with additional needs although as it can be requested with less notice that other types of leave, it is always worth ensuring there is an open dialogue between employers and employees if adoption is being considered. If we can help with an aspect of Adoption Leave or any other statutory leave, just get in touch.

There are just a couple of weeks left of 2024 and it’s been another eventful year. It’s been one of change but then we’ve got used to that recently so perhaps that’s no surprise. So just as it’s nearly time for presents, turkey and Father Christmas, it’s time for our annual review of the year blog.

Change at the top

One of the biggest developments this year in terms of impact on the economy, taxation and payroll is the results of the general election in July and the change in government. Shortly after parliament returned, the King’s Speech outlined some of the legislation the new government is planning which includes a new Employment Rights Bill and a Skills England Bill. You can read more about the speech here.

National Insurance

2024 is another year where National Insurance features in our review of the year. In January, the rate paid by workers fell by 2 percentage points to 10% and then in April it was reduced again to 8% which meant everyone’s take home pay increased a little.

Then at the end of October, the new Chancellor of the Exchequer delivered her first budget which included an announcement that the rate of National Insurance paid by employers will increase to 15% in April 2025 and will be payable on all salaries above £5,000. So while that won’t make a difference to employees’ pay packets, it will add to the cost of employing staff for employers.

Our blog reviewing all the announcements in October’s budget can be found here.

Inflation and interest rates

The cost of living crisis is still with us, but the rate of inflation has been falling this year and there are even some reports that the cost of this year’s Christmas dinner will be lower than last year.

This has meant that The Bank of England has felt able to start reducing interest rates, beginning with a fall of 0.25% in August and a further 0.25% in November.

The Office of National Statistics has just reported that pay rates rose by 5.2% between August and October which suggest that wages are starting to catch up with increased prices. It will be interesting to see how all these interconnected factors play out in 2025.

Pixie Payroll’s year

It’s been another really busy year at Pixie Payroll with new clients joining us and fellow director Phil now working full time in the business. We enjoyed a brilliant summer of cricket thanks to our continued sponsorship of Mullion Cricket Club and player Mathew Davies who was the top wicket taker with 28 wickets – congratulations Mathew! We still have the December payrolls to process but after that, we’ll be enjoying a well-earned break and some family time. Our office will close at 1pm on Tuesday 24^th December and will reopen at 9am on Monday 6^th January. We’d like to wish you all a very Merry Christmas and Happy New Year.