Employment Law Update – What’s Changing?
Twice a year, the Government reviews UK employment law and implements a series of changes; to help you keep on top of them, we’ve put together a round up of the changes, all taking affect from April 2021.
Do you use contractors? If so, then this is a major change you’ll need to explore in order to ascertain how it impacts your business; in short, the rules are aimed at reducing tax avoidance for contractors employed via personal service companies.
Reforms to the IR35 rules on off-payroll working in the private sector come into force in April 2021, having been delayed by a year due to the pandemic.
As with all employment regulations, IR35 is far from straight-forward, so we’ve written a separate blog post with all the detail you need, which you can read here.
Minimum Wage Increases
It may seem obvious but as an employer, it’s important you’re aware of the National Minimum Wage rates, which usually increase every April. Here’s what you need to know:
The National Living Wage (the highest band of the National Minimum Wage) increases to £8.91 per hour on 1 April 2021.
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.
The National Minimum Wage rates differ depending on the employee’s age. From 1st April 2021, the following will apply:
• Age 16-17 – £4.62
• Age 18-20 – £6.56
• Age 21-22 – £8.36
Depending on the age demographic within your organisation, this could mean a significant increase in staff wage costs. Make sure you know who’s entitled to an increase, inform them of the good news, and importantly, amend your HR system and payroll
Updated Statutory Payments
New limits on statutory redundancy pay come into force in 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 4 April 2021.
Employer’s should ensure that calculations for statutory redundancy payments are made on the basis of this maximum amount for redundancy dismissals on or after 4 April 2021.
If you need to make statutory redundancy calculations, there’s a handy calculator which can be found at https://www.gov.uk/calculate-your-redundancy-pay.
Statutory family-related pay and statutory sick pay
Employees needing to take family-leave are entitled to minimum rates of pay (subject to qualifying conditions such as length of service), which increase from 4th April.
The weekly rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay, increase to £151.97.
Employees in receipt of statutory sick pay will be entitled to an increased weekly rate of £96.35 from 4 April 2021.
It’s up to the employer 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, so ensure you update your people policies (maternity, paternity, sickness, etc) to reflect these increases, and communicate the changes to your payroll processor.
Gender Pay Gap Reporting
Employers with 250 or more employees are normally required to publish their gender pay gap report by April. The deadline for private-sector and voluntary-sector employers is normally 4 April, while for public-sector employers it is 30 March.
However, the Equality and Human Rights Commission (EHRC) has stated that, due to the coronavirus pandemic, enforcement of the gender pay gap reporting duty for the 2020/2021 reporting year is delayed for six months and does not begin until 5 October 2021.
Employers are still required to report their figures but have an extra six months in which to do so before enforcement action begins. The EHRC still encourages employers to report their data before October 2021, where possible.
Gender pay data has, for many, become an important factor in determining the sorts of organisations they want to be involved with; so even though enforcement has been temporarily relaxed, delays in reporting may still adversely affect your organisation’s reputation, not only in relation to current and future employees, but also customers and competitors.
So there you have it, no huge changes, but these are important updates none the less. As always if your organisation needs help in implementing any of these updates, get in touch for a discovery call firstname.lastname@example.org.