Following on from our winter update, here’s a reminder of the changes to employment law which come into effect from April 2021.
IR35 comes into force in the private sector
Having been delayed for a year due to the COVID-19 pandemic, reforms to the IR35 rules on off-payroll working in the private sector come into force on 6 April 2021.
The rules will apply to medium and large private sector companies and are aimed at reducing tax avoidance for contractors employed via personal service companies.
Under the new rules the company appointing the contractor is responsible for determining the individual’s employment status and assessing whether IR35 applies. If IR35 applies, the company that pays the individual’s fees is deemed to be their employer for tax and national insurance purposes.
With April just around the corner, read more about the changes, what this means for employers and the practical steps you can take now.
Increases in National Minimum Wage and National Living Wage
New rates for the National Living Wage and the National Minimum Wage will apply from 1 April 2021.
The National Living Wage, which currently only applies to workers aged 25 or over, will now be extended to cover 23 and 24 year-olds for the first time. The new rates will be:
- Those aged 23 or over (National Living Wage rate): £8.91 (up 2.2% from £8.72)
- 21 to 22: £8.36 (up 2% from £8.20)
- 18 to 20: £6.56 (up 1.7% from £6.45)
- 16 to 17: £4.62 (up 1.5% from £4.55)
- Apprentice rate: £4.30 (up 3.6% from £4.15)
- Accommodation offset £8.36 per week (up 2% from £8.20)
You can find out who is entitled to the National Minimum Wage and National Living Wage on the gov.uk website.
Increase in statutory sick pay
On 4 April 2021 the weekly rate of statutory sick pay will increase to £96.35 (up from £95.85), paid for up to 28 weeks.
It is paid for the days an employee would normally work (called ‘qualifying days’) in the same way as wages, for example on the normal payday, deducting tax and national insurance.
As a reminder, if an employee is off sick or self-isolating because of COVID-19, or has tested positive, they are entitled to claim statutory sick pay from the first ‘qualifying day’ they are off work (as long as they are off for at least four days in a row).
Increase in parental leave pay
From 4 April 2021 the weekly statutory rates of pay for the following will be £151.97 (up from £151.20), or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate.
- Maternity pay
- Maternity allowance
- Paternity pay
- Shared parental pay
- Adoption pay
On 4 April 2021 we will also see the first annual increase for statutory parental bereavement pay. This follows the introduction of the right to parental bereavement leave, available to the parents of a child who died on or after 6 April 2020.
Read more about the above rates on the financial support for families section of the gov.uk website.
Increase on the cap of weekly pay for redundancy payments
On 6 April 2021 the weekly cap on pay will increase from £538 to £544. Any statutory redundancy payments paid to employees made redundant on or after 6 April will need to take into account this increase.
To be eligible to receive statutory redundancy pay, an individual must:
- have at least 2 years’ continuous service;
- be an employee working under a contract of employment; and
- have been dismissed, laid off or put on short-time working (those who opt for early retirement do not qualify).
You can find more information on the current level of statutory redundancy pay rates here.
It’s also worth noting that if an employee is made redundant whilst on furlough, their redundancy payment needs to be based on what they would have earned normally (not their furlough pay).
We’re here to help
In addition to the five key changes above, Vento bands (for injury to feelings awards) will increase from 6 April 2021. Read more about the updated guidance here.
If you need support with any employment-related issue, speak to a member of your local employment team.
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