As an Employer, What Changes Do I Need to Make as of April 2021?

Compensation
posted by KeithDaniel

April 2021 will be an important month for both employers and us as employment lawyers, with a number of changes to the law being implemented. 

IR35 and off-payroll rules

As of 6th April 2021, medium and large private sector organisations which engage workers through personal service companies (PSCs) will have to assess the individual’s employment status for tax purposes. Currently, this rule only applies to organisations within the public sector.

This new rule means that if a worker’s employment status indicates that they are an employee, as opposed to self-employed, the organisation that engages the individual will be responsible for deducting tax and national insurance contributions on payments made to the PSC. Previously, this onus has been placed on the PSC.

As mentioned, the new rules will apply to large and medium companies. For these purposes, this means any company which is not regarded as “small” under the Companies Act 2006. A “small” company must meet two of the following qualifying conditions:

  • Have an annual turnover not more than £10.2m;
  • Have a balance sheet total not more than £5.1m;
  • Have no more than 50 employees.

National Living Wage and National Minimum Wage

As of 1st April 2021, the National Living Wage which has only ever applied to workers aged 25 and over, will be extended to 23 and 24-year-olds for the first time.

In addition, both the National Living Wage and National Minimum Wage rates will increase as follows:

National Living Wage Current Rates Rates as of 1st April 2021

Age 23 or over

£8.72 £8.91

Age 21 to 22

£8.20 £8.36

Age 18 to 20

£6.45 £6.56

Age 16 to 17

£4.55 £4.62

Apprentice Rate

£4.15 £4.30

Sick Pay, Maternity, Paternity, Adoption and Shared Parental 
From 4th April 2021, the statutory payments for sick leave, maternity, paternity, adoption and shared parental leave will increase as follows:

 

Current Rates (each week)

Rates from 4th April 2021

Statutory Sick Pay 

£95.85 £96.35

Statutory Maternity Pay 

£151.20 £151.97

Statutory Paternity Pay 

£151.20 £151.97

Statutory Paternity Pay 

£151.20 £151.97

Shared Parental Pay

£151.20 £151.97

Compensation limits and other statutory payments

From 6th April 2021, certain compensatory limits for tribunal awards and other statutory payments will increase. For cases involving dismissal where the effective date of termination falls on or after 6th April 2021, the following caps will apply:

  • The limit on a week’s pay will increase from £538 to £544.
  • The maximum compensatory award for unfair dismissal will increase from £88,519 to £89,493.
  • The minimum basic award for certain unfair dismissals (including health and safety dismissals) will increase from £6,562 to £6,634.

Furlough Leave

The Coronavirus Job Retention Scheme (or furlough scheme as most of us know it) will be extended until the end of September 2021. Those furloughed will continue to receive 80% of their wages, capped at £2,5000 a month, for hours not worked. From July 2021, employers will be required to make a 10% contribution to furlough pay, increasing to a 20% contribution for August and September 2021. In addition, employers will continue to be liable for paying the National Insurance contributions and employer auto-enrolment pension contributions on employees’ furlough pay.

Clinically Extremely Vulnerable Individual

From 1st April 2021, the clinically extremely vulnerable will no longer be advised to shield across England and Wales. Those who are clinically extremely vulnerable have been advised by the Government to continue to work from home where possible, however if they cannot work from home then they are advised to attend their workplace, provided their employers have taken steps to reduce the risk of exposure to COVID-19 in the workplace. At the time of writing, the shielding guidance for Wales states that the guidance will be updated on 31st March 2021 if the advice needs to be updated.

If you would like more information about the changes addressed in this article or any other aspect of employment law, please contact us on 02920 345511 or at employment@berrysmith.com