Kate Palmer, HR Advice Director at Peninsula shares with Business Leader, the five important law changes you need to be aware of ahead of April 2021.
With April just a few weeks away, employers need to be aware that some statutory changes are coming, along with some crucial details that should be kept in mind when it comes to minimum wages and contracting. With that in mind, here are five crucial employment law changes employers need to be aware of.
- ET compensation awards and rates
It has been confirmed that employment tribunal compensation rates are to increase from 6 April 2021. As of this date, the maximum week’s pay for redundancy pay purposes will increase from £538 to £544; however, statutory guarantee pay will be staying at £30.
This is important for the purposes of tribunal claims because it means that the maximum statutory redundancy pay, as well as unfair dismissal basic award pay, will both now be £16,320. The unfair dismissal compensatory award, which is set to compensate the claimant for past and future lost attributed to the dismissal, is a maximum of 52 weeks’ pay, subject to a new maximum of £89,493.
The maximum amount of additional award for unfair dismissal, set to compensate claimants when employers fail to adhere to a tribunal instruction to re-engage them, taking into account average weekly earnings, will rise to £28,288.
- Statutory Sick Pay
Employers are liable for the payment of statutory sick pay (SSP) to eligible employees. The current rate is £95.85 per week since 6 April 2020 and is set to rise to £96.35 from 6 April 2021. The lower earnings limit in relation to eligibility to statutory payments is to stay the same at £120 per week.
- Family leave
The weekly rates of statutory family leave – e.g. maternity/paternity leave, etc. – will increase by 77p per week on 4 April 2021, from £151.20 per week to £151.97 per week.
- Minimum wage rates
From 1st April 2021, national minimum wage rates are also set to increase. The new hourly rates are as follows:
- Workers aged 23 and over (National Living Wage) – £8.91
- Workers aged 21-22 – £8.36
- Development rates for workers aged 18–20 – £6.56
- Young workers rate for workers aged 16–17 – £4.62
- Apprentices under 19, or over 19 and in first year of the apprenticeship – £4.30.
- As seen above, the National Living Wage (NLW) threshold is lowering to include all those aged 23 and over. Currently, the NLW is payable only to people who were aged 25 and over.
The IR35 legislation, which aims to ensure that contractors are paying the appropriate amount of tax, is also changing for some private sector businesses.
Currently, most contractors are required to determine their own status as employee or contractor; however, from 6 April 2021, this liability will pass to medium and large-sector clients. Smaller clients will be exempt from this obligation, and the contractor remains liable for determining their own tax status.
There are many changes to get used to from April 2021 onwards, but employers must understand each element of these changes and seek further advice if they are unsure on any aspects of the laws surrounding these areas.