IoD Midlands Spring

Employment law update: host of
changes to rules around payments
April 2021 will see a number of changes to
current UK employment law which will
impact you, your team and your business.
The following areas will see an increase,
effective April 2021:
n National Minimum Wage
n Statutory Redundancy Calculations
n Family Related Pay
n Unfair dismissal compensation
n Statutory Sick Pay
n National Minimum Wage:
Minimum & Living Wage
In November 2020 Chancellor Rishi
Sunak announced that the National Living
Wage would increase to from £8.72 to £8.91
– a 2.2% increase, from April.
The National Living Wage is the highest
band of the National Minimum Wage. The
age threshold for National Living Wage has
been changed. Prior to 1st April 2021 this
level of minimum wage was only for those
aged 25 and over. This changes to apply to
23- and 24-year-old workers.
There are also changes to the National
Minimum Wage, in line with Low Pay
Commission recommendations. Workers
aged 21 to 22 see their national minimum
wage increase from £8.20 to £8.36; those
aged 18 to 20 see it rise from £6.45 to £6.56;
and those aged 16 and 17 see it increase
from £4.55 to £4.62. The rate for
apprentices under 19 or in their first year
of apprenticeship rises to £4.30.
Statutory Redundancy Calculations
New limits of statutory redundancy pay
will come into force from 6th April 2021.
Employers who dismiss employees with
over two years’ service for redundancy
must pay an amount based on the
employee’s weekly pay, length of service
and age.
Half a week’s pay for each full year they
were aged under 22.
One week’s pay for each full year they
were aged 22 or older, but under 41.
One and half week’s pay for each full
year they were aged 41 or older.
Length of service is capped at 20 years.
The weekly pay is the average earned per
week over the 12 weeks before the day they
received the redundancy notice, to a new
maximum of £544 a week.
Family Related Pay
Statutory maternity, paternity, adoption,
shared parental leave and parental
bereavement leave pay have all increased,
to £151.97.
Statutory Maternity Pay (SMP) is paid
for up to 39 weeks. Claimants receive 90%
of average weekly earnings (before tax) for
the first six weeks, followed by the
statutory rate or 90% of your average
weekly earnings (whichever is lower) for
the next 33 weeks. The statutory rate will is
now £151.97.
On Paternity Leave Pay, claimants can
choose to take either one or two weeks, at
£151.97.
Statutory Adoption Pay is paid for up to
39 weeks at the same rate as maternity pay.
Where a child dies before they turn 18,
or if you have a stillbirth after 24 weeks of
pregnancy, employees can claim Parental
Bereavement and take two weeks’ leave
from the first day of your employment for
each child who has died or was stillborn.
This week rate increased to £151.97.
Unfair Dismissal Compensation
The new maximum Compensatory
award for Unfair Dismissal is £89,493.
Statutory Sick Pay (SSP)
The new rate of SSP is £96.35. SSP
payable for up to 28 weeks from the 4th
day of absence. If are in self-isolation
related to the Coronavirus, you will receive
SSP from day one of absence.
IR35
Reforms to the IR35 rules on off-payroll
working in the private sector come into
force on 6th April 2021. This has been
delayed by a year due to the coronavirus
pandemic.
The purpose of the IR35 rules is to aid
the reduction of tax avoidance for
contractors employed via personal service
companies. Under the new rules, the
organisation engaging with a contractor is
responsible for determining their
employment status and assessing whether
IR35 applies. If IR35 does apply the
organisation that pays that individuals fees
are 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 why they have
reached that determination. Employers
should review contracts and put in place
necessary procedures to ensure compliance.
As an employer, you should be ensuring
that your business has updated policies
and pro-formas with the new statutory
amounts and ensure that pay increases for
minimum wage employees have been
processes.
Check whether IR35 applies to you and
your business.
• Clover HR can provide support and
guidance in relation to both the changes
to UK Employment Law and new IR35
rules and ensure you are fully compliant.
See www.cloverhr.co.uk
www.iod.com/westmids/events
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