Employers should be aware of the following key changes in employment law this month:
National Living Wage/National Minimum Wage – 1 April 2021
The National Living Wage normally applies to workers aged 25 and over, however, this year it will be extended to 23 and 24 year olds, and will increase to £8.91 per hour.
The revised hourly rates for National Living Wage (for those aged 23 and over) and National Minimum Wage are as follows:
- Age 23 +: £8.91
- Age 21-22: £8.36
- Age 18-20: £6.56
- Under 18: £4.62
- Apprentice: £4.30
Family Related Pay – 4 April 2021
Statutory maternity, adoption, shared parental, paternity and parental bereavement pay will increase to £151.97 per week (or equivalent to 90% of employee’s average weekly earnings).
Statutory Sick Pay (SSP) – 6 April 2021
Statutory Sick Pay (SSP) standard rate will increase to £96.35 per week.
Unfair Dismissal Awards and Redundancy Pay – 6 April 2021
New limits on the basic award and compensatory award for unfair dismissal, aswell as statutory redundancy pay, are as follows:
- Unfair dismissal – the statutory maximum compensatory award will increase to £89,493 or 12 months’ pay (whichever is lower).
- Basic award/statutory redundancy pay – the maximum basic award in unfair dismissal claims, and the maximum statutory redundancy payment, will increase to £16,320. The limit on a week’s pay for calculating statutory payments will increase to £544.
IR35 – 6 April 2021
Reforms to the IR35 rules on off-payroll working come into force in the private sector on 6 April 2021, after being delayed from April 2020 due to the pandemic.
The IR35 rules, which are to be extended to medium and large private sector organisations, are aimed at reducing tax avoidance where services are provided by a contractor via a personal services company and effectively shift the burden onto employers to prove that workers are in fact self-employed.
Under the new rules, the organisation engaging the contractor is responsible for determining the employment status of the contractor and assessing whether or not IR35 applies. If IR35 does apply, the organisation that pays the contractor’s fees is deemed to be the employer for tax and national insurance purposes.
Gender Pay Gap Reporting – now extended from 4 April until 5 October 2021
Employers with 250 or more employees are legally required to report on the difference in earnings between men and women. Most employers were originally required to publish their pay gap information by 4 April 2021, however, due to the pandemic, employers have been given a six-month reprieve and the deadline has been extended to 5 October 2021.
However, whilst the Equality and Human Rights Commission (EHRC) has confirmed that it will not begin enforcement proceedings before 5 October, it has urged businesses to report by the April deadline where possible.
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