New Policy & Law in the UK in April: Employment Law Changes and Five Things to Note
New Policy- New Law: Increased national minimum wage rates (April 1)
The following national minimum wage hourly rates will be effective from 1 April 2021:
• The national living wage (workers aged 23 and over): £8.91
• The standard adult rate (workers aged 21-22): £8.36
• The development rate (workers aged 18-20): £6.56
• The young workers rate (workers aged 16 and 17 who are not apprentices): £4.62
• The apprentice rate (apprentices under 19 or aged 19 or over and in the first year of apprenticeship): £4.30
In addition, the age threshold for the national living wage is amended so that it applies to 23- and 24-year-old workers from 1 April 2021. Previously, the national living wage was available only to those aged 25 and over.
Other national minimum wage rates also increase on 1 April 2021, with hourly rates rising to £8.36 for workers aged 21 and 22, to £6.56 for workers aged 18 to 20 and to £4.62 for workers aged 16 and 17.
New Policy- New Law: New statutory rates (April 4-6)
The maximum unfair dismissal compensatory award will increase to £89,493 (from £88,519). Consequently, for any dismissals which take effect on or after 6 April 2021, the cap on the compensatory award will be the lower of £89,493 or 52 weeks' pay.
The limit on a week's pay used to calculate certain statutory payments and provisions will rise to £544 (from £538). As a result, the maximum basic award / statutory redundancy payment will be £16,320 from April.
Statutory sick pay will increase to £96.35 per week (from £95.85) from 6 April 2021.
Statutory maternity, adoption, shared parental, paternity and parental bereavement pay will increase from £151.20 to £151.97 per week from 4 April 2021.
It is up to HR to make sure that staff on maternity leave, paternity leave, adoption leave, shared parental leave, parental bereavement leave and sick leave are paid these statutory minimum rates.
HR professionals also need to review their policies and documents that mention the rates, such as their maternity policies and sickness absence procedures.
New Policy- New Law: Update statutory redundancy pay calculations (April 6)
The maximum compensatory award for unfair dismissal increases from £88,519 to £89,493 for dismissals that take place on or after 6 April 2021.
New limits on employment statutory redundancy pay come into force on 6 April 2021.
Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. This amount is £544 from 6 April 2021.
HR professionals should ensure that calculations for statutory redundancy payments are made on the basis of this maximum amount for redundancy dismissals on or after 6 April 2021.
New Policy- New Law: IR35 in the private sector (April 6)
On 6 April 2021 the off-payroll working (IR35) rules will be extended to the private sector. End user clients (other than small companies which fall below certain thresholds) will need to assess all off-payroll workers to determine:
if they are operating through an intermediary such as a personal service company (PSC); and
if they are, whether they would be taxed as an employee for tax purposes were it not for the PSC.
If it is determined that the worker would be an employee for tax purposes, the entity which pays the PSC (which may be the end user client or a UK employment business in the chain) needs to account for PAYE income tax and employee and employer NICs.
End-user clients will also need to set up processes for making status decisions; communicating status determination statements (with reasons) to workers and other parties they have contracted with in the chain; and dealing with disputes.
Under the new rules, the organisation engaging the contractor is responsible for determining their employment status and assessing whether or not IR35 applies. If IR35 does apply, the organisation that pays the individual’s fees is deemed to be their employer for tax and national insurance purposes.
Once the organisation has determined an individual’s classification, it must provide a status determination statement to the individual and to the party with which the organisation has contracted. For the statement to be valid, the client must also provide reasons for the determination.
Employers should review their contracts and put in place the necessary procedures to ensure compliance.
New Policy- New Law: Report on gender pay gap (April 4)
The Equality and Human Rights Commission has advised that it will delay enforcing gender pay gap reporting for the year 2020/21 until 5 October 2021, meaning the last date for publishing a report is now 4 October 2021 for both private and public sector employers, rather than 4 April (private sector) or 30 March (public sector). Employers are being encouraged to submit their data before October where possible.
Each year, employers with 250 or more employees are legally required to report on the difference in earnings between men and women. This exercise helps organisations to understand the size and causes of pay disparity and provides HR with insight it can use to identify strategies which will narrow the gap.
This is the second year in a row that the government has sacrificed gender pay reporting due to coronavirus. While the Minister for Women and Equalities, Liz Truss, conceded last year that it was “only right” to suspend gender pay reporting due to the pressures on business, the women and equalities select committee has now expressed concerns that the pandemic has “risked further entrenching inequalities between women and men” and has called for gender pay reporting to be urgently reinstated, so watch this space.
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