April is a busy month for employment law changes and updates. We have set out below the main changes that employers ought to be familiar with ahead of 1 April.
Changes to National Living Wage and National Minimum Wage
The National Living Wage and the National Minimum Wage rates will increase on 1 April 2021 to:
- Workers aged 23 and over: £8.91 (National Living Wage)
- Workers aged 21-22: £8.36
- Workers aged 18-20: £6.56
- Workers aged 16-17: £4.62
- Apprentices rate: £4.30
The National Living Wage normally applies to workers aged 25 and over (excluding those in the first year of an apprenticeship). However, this year, Chancellor Rishi Sunak announced that it will be extended to 23 and 24-year-olds for the first time, representing a substantial pay rise of almost 9%.
Record keeping changes for National Minimum Wage and National Living Wage
With effect from 1 April 2021, new regulations extend the period for which an employer must keep records sufficient to establish that it is paying a worker at a rate at least equal to the applicable minimum wage rate from three years to six years. This will apply to existing and future records.
Employers will need to consider making changes to their payroll processes to ensure that records are kept for the appropriate period.
Changes to statutory payments
From 4 April 2021, the weekly rates of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay will increase from £151.20 to £151.97 (or 90% of an employee’s average weekly earnings, whichever is lower).
The Statutory Sick Pay (SSP) standard rate will also increase from 6 April 2021 to £96.35 per week.
Increases to statutory redundancy payments and unfair dismissal awards
New rates for statutory redundancy pay and compensation limits for employment tribunal awards will apply where the effective date of termination is on or after 6 April 2021. The increases are as follows:
- The maximum amount of a week’s pay (used for calculating a redundancy payment or for various awards including the unfair dismissal basic award): £544 (increased from £538), with the maximum basic award/ statutory redundancy payment increasing to £16,320 (from £16,140).
- The maximum amount of an unfair dismissal compensatory award: £89,493 or 12 months gross salary, whichever is lower (increased from £88,519).
- The minimum basic award for automatically unfair dismissals (including health and safety dismissals): £6,634 (increased from £6,562).
Changes to shielding advice
The shielding guidance is changing for individuals who have been classed as clinically extremely vulnerable during the Coronavirus pandemic. On 5 January 2021, these individuals were advised to shield. However, this will no longer apply from 1 April 2021.
This means that these workers will no longer be eligible for statutory sick pay or Employment and Support Allowance on the basis of being advised to shield.
Where possible, working from home is advised for the clinically extremely vulnerable despite the fact that there is no longer a requirement to shield. Where this is not possible, employers must take precautions to reduce the risk of transmission in the workplace.
These workers may still be eligible to be furloughed where they are classed as clinically extremely vulnerable, depending on the circumstances. The Government guidance for employers states “Your employee is eligible for the grant and can be furloughed, if they are unable to work, including from home or working reduced hours because they are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance.”
Gender Pay Gap Reporting
Employers with 250 employees or more are required to make an annual “gender pay gap report”. For 2020/2021, the report is based on arrangements as at the “snapshot date” of 5 April 2020 for the private sector and 30 March 2020 for public sector organisations.
Last year, the Equality and Human Rights Commission (EHRC) and Gender Equalities Office suspended the enforcement of gender pay gap reporting requirements for the reporting year 2019/20 in the face of the COVID-19 pandemic.
The EHRC has confirmed that it will take enforcement action this year if employers do not comply with the reporting requirements. However, it will not start to take enforcement action until 5 October 2021. This gives organisations a six-month grace period after 4 April reporting deadline to submit their data if they are unable to meet the actual deadline. The EHRC may investigate employers who do not report their gender pay gap data. It has the power to take court action, which could ultimately lead to unlimited fines
While the EHRC has confirmed that it will not begin enforcement proceedings before 5 October, it has urged companies to report by the April deadline if possible.
IR35 off-payroll working rules will come into effect on 6 April 2021
The postponed reforms to the IR35 tax rules, which were due to come into force in April 2020, will now take effect from 6 April 2021. These reforms will affect large and medium-sized businesses in the private sector which engage independent contractors through intermediaries such as personal services companies.
Under the new rules, the responsibility for determining a contractor’s employment status will switch to the end user business, and if it determines that IR35 applies, PAYE and NICs will become the responsibility of the fee payer (the entity which contracts directly with the contractor’s intermediary). End-users that ignore the new rules could end up with significant extra tax liabilities and penalties.
We are able to provide advice and guidance on the issues highlighted above. Please contact https://taylorwalton.com/services-for-business/employment