Employment law changes coming into force in April 2021
As is usual for this time of the year, April is always a busy month in employment law, and this year is no exception. From April 2021, several new changes are being introduced, including a higher National Minimum Wage and National Living Wage; reforms to delayed IR35 Rules in the private sector and increases to statutory family, redundancy and sick related pay.
We also see the compensation limits applying to certain employment claims, with increases taking effect from 6th April 2021. As well as some other updates relating to shielding and the Coronavirus Job Retention Scheme.
Increases to both the National Living Wage and National Minimum Wage
This year, from 1st April, the age at which employees become entitled to the National Living Wage (NLW) will decrease from 25 to 23 years. National Minimum Wage (NMW) and the Apprentice Wage also increases.
This year the rates will be:
- NLW will increase from £8.72 per hour to £8.91 per hour (for those aged 23 and over)
- NMW 21 to 22-year-old rate will increase from £8.20 per hour to £8.36 per hour
- NMW 18 to 20-year-old rate will increase from £6.45 per hour to £6.56 per hour
- NMW 16 to 17-year-old rate will increase from £4.55 per hour to £4.62 per hour
- NMW apprentice rate for those aged under 19 or in their first year of an apprenticeship will increase from £4.15 per hour to £4.30 per hour
New statutory rates
From 6th April, new statutory rates will increase.
- From 6th April 2021, the statutory sick pay rate will increase from £95.85 per week to £96.35.
- From 4th April 2021, the rate of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay will increase from £151.20 per week to £151.97.
Compensation limits applying to certain employment claims will increase with effect from 6th April 2021.
The limit on a week's pay used to calculate certain statutory payments and provisions will rise to £544 (from £538).
This means that as a result, the maximum ‘basic award’ or ‘statutory redundancy payment’ will be capped at £16,320 from April 2021.
Compensation for unfair dismissal
Compensation for unfair dismissals claims will also see an increase with effect from 6th April 2021.
Claims are split into a ‘basic’ award and a ‘compensatory’ award, and the ‘basic’ award is calculated on a week’s pay as mentioned above with the new increased rate.
The maximum unfair dismissal compensatory award will increase to £89,493 (from £88,519). This means any dismissals which take effect on or after 6th April 2021, the cap on the compensatory award will be the lower of £89,493 or 52 weeks’ pay.
Guaranteed payments remain unchanged at £30 per day.
Gender Pay Gap report enforcement delayed until October 2021
Gender Pay Gap reporting was suspended in 2020 due to the COVID-19 pandemic, and it has been announced that enforcement of the reporting requirement will be suspended again this year, for a period of 6 months, meaning the last date for publishing a report is now 4th October 2021 for both private and public sector employers rather than 30th March (public sector) and 4th April (private sector) deadlines.
Employers are encouraged to submit their data before the October deadline where possible, and employers should also be mindful that calculations will be complicated this year by furlough.
IR35 in the private sector
On 6th April 2021, the off-payroll working (IR35) rules will be extended to the private sector - delayed by 12 months due to the COVID-19 pandemic. The rules shift responsibility for determining the status of a contractor and liability for deducting tax and NIC, if IR35 applies, to the hiring organisation.
This means that if this applies to you, you will need to set up processes for making status decisions; communicating status determination statements (with reasons) to workers and other parties they have contracted within the chain; and dealing with disputes.
And finally some other updates
Public Health England have changed their guidance on shielding
From 1st April 2021, those of your employees who are designated as extremely clinically vulnerable from COVID-19 will no longer be advised to shield. However, in line with current government guidelines, they should continue to work from home if they can.
As a result of this change in government advice, those employees will no longer be eligible for SSP if they cannot work, or similar benefits, that they’re currently entitled to receive due to being asked to shield from COVID-19.
Extension of the Coronavirus Job Retention Scheme
On 3rd March 2021 in the Spring Budget, the Chancellor confirmed a further extension of the Coronavirus Job Retention Scheme which will finally come to an end on 30th September 2021. The government will continue to pay 80% of an employee's wages, for hours not worked until the end of June 2021.
From July 2021, employers will need to start to contribute towards their employee’s wages with a contribution of 10% of their wages. For the final two months of the scheme, August and September, the employer’s contribution rate will increase to 20%. The employee will always receive 80% of their normal wages.
How can HR:4UK Help you?
As we continue to work our way through the roadmap out of COVID-19 restrictions, we continue to face uncertainty, HR:4UK are always here waiting to help you, doing everything we can to advise and support you, ensuring you avoid any risky and costly mistakes. Speak to us today on 01455 444222 or email firstname.lastname@example.org