Employment Law Update 2021
There are numerous changes to the law of employment that come into force in April 2021.
1. National Living Wage
On 1 April 2021 the National Minimum Wage increased to:
- £8.91 for those aged 23 and over
- £8.36 for those aged 21 to 22
- £6.56 for those aged 18 to 20
- £4.62 for under 18s
- £4.30 for apprentices
2. Compensation Limits
The key compensation limits which come into effect from 6 April 2021 are:
- Maximum week’s pay for calculating unfair dismissal basic and additional awards and statutory redundancy pay: £544
- Maximum statutory redundancy payment/ unfair dismissal basic award: £16,320
- Maximum unfair dismissal compensatory award: £89,493
- Failure to give written statement of particulars: £1,088 or £2,176 (two or four weeks’ pay calculated at the statutory amount).
3. Statutory rates
The statutory rates have been increased to:
- Statutory Maternity Pay: Prescribed Rate (from 4 April 2021): £151.97
- Statutory Redundancy Payment (from 6 April 2021): £16,320
- Statutory Sick Pay (from 4 April 2021): £96.35
4. Gender Pay Gap reports
Due to the impact of Coronavirus, the Equality and Human Rights Commission (EHRC) have announced that enforcement of gender pay gap reporting for the 20/21 reporting year (which uses a snapshot date of 31 March 2020 and 5 April 2020) will not begin until 5 October 2021. The EHRC is encouraging employers to report ahead of the usual deadlines (30 March 2021 and 4 April 2021) wherever possible, but no enforcement action will be taken providing they report by 5 October 2021.
5. New IR35 Rules
Prior to the new rules, businesses in the private sector were able to engage contractors using personal services companies (or other intermediaries) without having to consider to the contractor’s status for tax purposes. The new IR35 rules change the responsibility for determining a contractor’s status and, if appropriate, operating PAYE and National Insurance contributions (NICs) from the personal services company to the end-user business.
The reforms affect large and medium sized businesses and only organisations which meet at least two of the following criteria will need to do this:
• Over 50 employees;
• A net turnover in excess of £10.2m;
• Over £5.1m on their balance sheet.
Contractors who provide labour through a personal services company will need to complete their tax returns for year 2020-21 and continue to self-assess their own IR35 status. If a contractor has already received a status determination from their end-user, they will need to consider whether and how it affects their self-assessment.
If you would like more specific advice on how these changes could affect your business please get in touch with your usual contact or email: email@example.com