Employment Law Changes: April 2021
In spite of our still being in the throes of the Covid-19 pandemic, Employment Law still goes on and next month will see a few changes to existing employment practice being introduced.
IR35 in the Private Sector
The way in which the IR35 rules operate in the private sector will change on 6 April 2021. These reforms will see contractors lose the ability to determine their own tax status and place this burden on those who engage them. Large and medium-sized businesses in the private sector that engage independent contractors via an intermediary (usually a personal service company) will become responsible for assessing whether the IR35 rules apply.
If a business determines that a contractor is an employee for tax purposes, then the party that pays the fee to the intermediary must deduct tax and National Insurance Contributions.
Increases to statutory payments
The following payments will increase on 4 April 2021:
- Statutory Maternity Pay, Maternity Allowance, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay: £151.97 per week (up from £151.20).
Statutory Sick Pay will then be subject to an increase on 6 April with a increase to £96.35 per week, from £95.85.
Employers should ensure that the correct rates are paid to affected employees and that any policies and template letters that refer to the statutory rates of pay are updated, particularly in respect of any Covid-19 related absence where the entitlement to SSP is extended.
National minimum wage
The minimum age threshold for entitlement to the National Living Wage will decrease from 25 to 23 years of age. In addition, the hourly rates will increase as follows:
- National Living Wage – age 23+: £8.91 (up from £8.72).
- Standard adult rate – age 21+: £8.36 (up from £8.20).
- Development rate – age 18+: £6.56 (up from £6.45).
- Youth rate – age 16+: £4.62 (up from £4.55).
- Apprentice rate: £4.30 (up from £4.15).
Employment Tribunal awards to increase
The limits on certain Employment Tribunal awards will increase as follows:
- The ceiling on “a week’s pay” for calculating redundancy payments, the basic award for unfair dismissal and various other statutory rights: £544 (up from £538).
- Maximum compensatory award for unfair dismissal claims: £89,493 (up from £88,519).
In dismissal claims, these figures will apply to claims where the effective date of termination falls on or after 6 April 2021.
Employers must ensure that they calculate any redundancy payments in line with the new thresholds for any redundancies taking place on or after 6 April 2021.