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Budget 2021: Employment Matters Affecting You

On Wednesday, 3 March 2021, Chancellor Rishi Sunak announced the UK's 2021 budget and, in his speech, stated that this budget 'meets the moment with a three-part plan to protect the jobs and livelihoods of the British people'. The UK Spring Budget outlines the Chancellor's three-part plan' towards the economic recovery, supporting those still struggling through the pandemic crisis.

Let's take a look at some of the key points arising out of the Budget that may affect you and your business.

The Coronavirus Job Retention Scheme has been extended until 30 September 2021

The extension of the Coronavirus Job Retention Scheme (CJRS) will bring hope to many business owners and will be a life-line to those businesses that hit the hardest. The extension of the CJRS will support businesses to continue to furlough staff over the summer as we start to see a recovery in the economy.

The level of the grant available to employers under the scheme will remain the same until the end of June 2021. For periods ending on or before 30 June 2021, you can claim 80% of an employee's usual salary for hours not worked, up to a maximum of £2,500 per month.

From July 2021, the level of the grant will be reduced, and employers will be asked to contribute towards the cost of your employees' furloughed wage, with the employer contribution rate rising to 10% in July and to 20% in August and September, when the scheme will finally come to an end.

The reduction in the level of the grant means that the percentage recovery of furlough wages will be as follows:

  • For July 2021, 70% of furlough wages up to a maximum cap of £2,187.50.
  • For August and September 2021, 60% of furloughed wages up to a maximum cap of £1,875.00.

Employers will continue to be required to fund employer NICs and mandatory minimum auto-enrolment pension contributions.

There has also been a change to the employee eligibility criteria which means that for periods starting on or after 1 May 2021, you can put an employee on furlough as long as they were employed by you on 2 March 2021 and as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021. You do not need to have previously claimed for an employee before 2 March 2021 to claim for periods starting on or after 1 May 2021.  

The eligibility criteria for which businesses can claim has also been updated to include organisations who created and started a PAYE payroll scheme on or before 2 March 2021 will be eligible to make a claim for periods starting on or after 1 May 2021.

These changes to the eligibility criteria will support new businesses and also businesses that have taken on new recruits.

We advise all employers to ensure that they have furlough agreements with employees and that records are kept of all usual hours worked and hours claimed. To meet HMRC auditing requirements, these records are to be kept for a minimum of 5 years.

As your trusted HR business partner, we have updated our Furlough Agreement to reflect these changes. Of course, if you have any questions, our team of advisors are ready to help you.

Apprenticeships and traineeships

The government will extend and increase payments to employers who hire new apprentices. This is a double incentive to take on an apprentice, and employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive a payment of £3,000 for any new hire across any age.

The government has introduced a new fund from July 2021 to help employers set up and expand portable apprenticeships, enabling people who work across multiple projects with different employers to benefit from the high-quality long term training that apprenticeships provide.

The government will provide additional funds for high-quality work placements and training for 16-24-year-olds in the 2021/2022 academic year, with employers who provide traineeships will continue to receive funding of £1,000 per trainee.

National Living Wage (NLW) and National Minimum Wage (NMW)

The NLW and NMW increase will be extended to 23 and 24-year-olds in recognition of the risks to young people. From 1 April 2021, the new hourly rates for NLW and NMW are:

Age Range 2020 Rate 2021 Rate Increase
National Living Wage (23+) £8.72 £8.91 2.2%
National Minimum Wage (21-22) £8.20 £8.36 2.0%
National Minimum Wage (18-20) £6.45 £6.56 1.7%
National Minimum Wage (under 18) £4.55 £4.62 1.5%
Apprenticeship Wage £4.15 £4.30         3.6%


Off-payroll working in the private sector

From 6 April 2021, new rules for individuals who provide their personal services via an 'intermediary' to a medium or large business will come into force. The off-payroll working rules apply where workers provide their services through an intermediary, such as a personal service company, to another person or client.

If the off-payroll working rules apply to you, the determination of a worker's status and communicating this to the worker is now your responsibility. In addition, you will need to make deductions for income tax and NICs while also paying the employer NICs.

Join our FREE HR Webinar with Angela Clay

HR:4UK hold FREE HR and Employment webinars with live Q&A's. Join me, Angela Clay, Managing Director, on Friday, 26 March 2021, in an hour-long discussion on the latest HR topics. 

This month I will discuss mental health in the workplace, where I will be joined by a special guest, Linda Neville from SanteMente Community. Until then, you can watch my latest webinar where I discuss upcoming employee wage laws, the changes to furlough (prior to the 2021 budget announcement) and much more.

You can watch the latest webinar here.

HR:4UK are here for you - contact us today

Our friendly team are here waiting to help you, no matter what your problem and no matter how small, HR:4UK are always here to help you avoid any risky and costly mistakes.

Disclaimer: Please note this is not legal advice on your circumstances and HR:4UK are not qualified to give medical advice. Our advice is based on our understanding of the information currently available and may be subject to change as and when more guidance becomes available.