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Under 21s to be taken out of employers' NI Contributions

Employers who employ or engage employees under the age of 21 at or after 6 April 2015 will not be required to pay employer NICs on the earnings they pay to those employees. This applies to all those young employees who earn less than the Upper Earnings Limit for basic rate tax, which is currently £813 per week, or £42,285 per year. This measure will save employers £500 against the cost of a £12,000 per year young worker, based on the current Employers NIC rate of 13.8%. (for more on NI rates and allowances follow this link).

A note of caution in this otherwise positive move for youth employment prospects is to ensure that workers over the age of 21 are not dispatched in favour of younger employees who qualify for the exemption. As well as risking a possible spike in the unemployment of 22 year olds, employers need to be aware of the risks of age discrimination, which traditionally is assumed to apply only to older people. In this case a worker dismissed in favour of an NIC exempt younger person may be able to show that the dismissal was due to their age, and therefore was discriminatory. It’ll be interesting to see whether a court case will eventually test this theory.

 

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