UK Employment Changes – April 2021

 April brings the new payroll tax year as well as some employment law changes for UK Employers. The changes predominantly relate to certain pay rates, however. It is always a timely reminder that employers should review and update their policies and procedures, at least annually, to ensure that they are not only compliant and fit for purpose but also engaging and shared with their employees.  

Those with UK employees should note; 

IR35 – the new rules around contractors came into place on 6th April 

The Change 

IR35 is designed to combat tax avoidance by workers, and the companies hiring them, who are supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.  

Employers should;

  1. Determine an individual’s classification; 
  2. 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. 
  3. Review all 3rd party contracts and put procedures in place to ensure compliance. 

Minimum wage increases – 1 April  

The Change 

The national living wage (NLW) increases to £8.91 per hour on 1 April 2021. 

The age threshold for the NLW is amended so that it applies to 23 and 24-year-old workers (previously only available only to those aged 25 and over). 

National minimum wage rates increases per hour as follows; 

  • £8.36 for workers aged 21 and 22 
  • £6.56 for workers aged 18 to 20 
  • £4.62 for workers aged 16 and 17 

Employers should; 

  1. Review wages and contracts to ensure that workers are being paid at least the national minimum wage for their age  
  2. Update employment paperwork where required 

Statutory Redundancy Payment Increases – 6 April  

The Change 

Upon redundancy, employees with 2 or more completed years’ service are entitled to a statutory redundancy payment based on their length of service, age and their weekly pay. Their weekly pay for redundancy purposes is the lower of their contractual weekly pay or the statutory weekly pay which is subject to a cap on the amount. 

From 6th April – the cap will be increased to £544 per week. 

Employers should; 

  1. Review and update their redundancy policies 
  2. Ensure that any redundancy payment calculations are reviewed to reflect the increased rate of a week’s pay. 

Statutory Family related & Sick Pay Increases – April  

The Change 

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 the statutory minimum rates. 

From 6th April – the weekly caps will be increased to; 

  • Statutory maternity, paternity, adoption, shared parental and parental bereavement pay increases to £151.97 from 4 April 2021. 
  • Statutory sick pay increases to £96.35 from 6 April 2021. 

Employers should; 

  1. Review and update their maternity, paternity, adoption and other family related policies to reflect the increased cap on a week’s pay 
  2. Update their sick pay policies to ensure that they reflect the updated cap on a week’s pay 
  3. Consider whether they should specify the amount of a week’s pay in such policies or simply refer to wording such as ‘the amount of a week’s pay will be capped at the statutory rate in force at any given time’.

 Gender Pay Gap reporting 

 The Change 

Employers with more than 250 employees are required to publish their gender pay gap report each year. This deadline is usually on the following dates; 

  • Private & voluntary sector – 4th April  
  • Public sector – 30th March  

However – in light of the pandemic, the reporting deadlines have been delayed to 5th October 2021. 

While this applies to employers with more than 250 employees, it does highlight the importance of such reviews and it would be prudent for employers without reporting obligations to take the opportunity to review their own pay in terms of gender equality.  

Employers should; 

  1. Prepare their Gender Pay Review Report ahead of the deadline if they have more than 250 employees  
  2. Employers with less than 250 employees should consider using this time as an opportunity to do an internal pay review and analysis and identify any discrepancies. 
  3. Review and update pay and grading structures 
  4. Ensure that equality policies are reviewed and updated. 

Closing  

Employers should schedule time into their diaries to ensure compliance with the above mentioned changes. These annual updates provide employers with the opportunity to review their policies and processes as a whole to ensure that they are working for the business.  

If you need any assistance with policy reviews or implementing the changes above, please do not hesitate to get in touch – julia@zeal.im