Today’s Budget: what does it mean for employers?

For employers, there will be a further increase in minimum wage rates. From 1 April 2027, the National Living Wage will rise by 3.9% from £12.71 to £13.21 per hour, while the rate for 18 to 20-year-olds will increase by 3.9% to £11.27. The increase is more modest than those seen by 18 to 20-year-olds over the previous two years, when successive increases raised the minimum hourly rate by 26% overall.

Although welcome news for lower-paid employees, the impact for employers may extend beyond the headline increase. Raising the statutory minimum can put pressure on wider pay structures.

The Budget 2026 policy paper also confirms that the Government intends to legislate on non-compete clauses, with the reforms applying across the economy. A non compete clause restricts an employee from joining a competitor or setting up a competing business for a period after leaving their employer. The Government will consult on the wider use of restrictive practices and intends to set out its detailed position in early 2027, ahead of legislation. At this stage, the detail is limited. It would therefore be premature to assume that existing non-compete clauses will become unenforceable or that a particular statutory time limit will apply.

Businesses which rely heavily on restrictive covenants to protect confidential information, customer connections or other legitimate business interests should watch the consultation closely and may ultimately need to reconsider how those interests are protected.

From April 2029, eligible self-employed fathers, partners and adopters will be able to access parental pay for the first time. The measure will also cover certain people with a broken or irregular employment history who do not qualify for statutory paternity or adoption pay, provided they meet the relevant work and earnings requirement.

The Budget comes at a time when employers are already navigating significant changes to employment law. From 1 October 2026, the limitation period for most Employment Tribunal claims increased from three to six months. Further significant changes to unfair dismissal rights will follow from 1 January 2027, when the qualifying period for ordinary unfair dismissal will reduce from two years to six months. The existing statutory cap on compensatory awards for unfair dismissal will also be removed. From 30 October 2026, employers will also be required to take “all reasonable steps” to prevent sexual harassment of their employees, alongside new protection against harassment by third parties, such as customers and clients.

Should you wish to discuss a Employment legal matter, feel free to contact a member of our team by calling your local office on 0800 011 1195 or emailing .