Employers should be aware that throughout April 2021 there will be a number of changes to the calculation of statutory entitlements. The main changes concern the National Minimum Wage, parental leave entitlements, statutory sick pay, weekly payment caps and compensatory awards.
National Minimum Wage
The Government has announced updated levels of pay in terms of the National Minimum Wage and Living Wage based on a report of the Low Pay Commission published in October 2020. These new rates, listed below, will come into force on 1st April 2021:
|April 2020||April 2021|
|National Living Wage||£8.72||£8.91|
|21-22 Year Old Rate||£8.20||£8.36|
|18-20 Year Old Rate||£6.45||£6.56|
|16-17 Year Old Rate||£4.55||£4.62|
Agricultural Wages Order
The updated Agricultural Wages Order will also come into effect on 1st April 2021. The Order follows the National Living Wage, so the updated minimum hourly rate for an Agricultural Worker of all ages will be £8.91 (except for agricultural apprentices under 19 or over 19 and in the first year of their apprenticeship, for whom the hourly rate will increase to £5.58).
The detailed guidance can be found here.
From 4th April 2021 certain entitlements regarding parental leave will increase in line with the consumer price index. Statutory Maternity, Shared Paternal, Adoption, Paternal and Parental Bereavement Pay will all increase to £151.97 per week.
From 5th April 2021 Statutory Sick Pay will increase to £96.35. In general terms, to be eligible for Statutory Sick Pay (SSP) you must be an employee, earn on average at least £120 per week, and have been ill for at least four consecutive business days.
The Coronavirus Amendments continue to apply to SSP at the time of writing. This means that SSP is payable from the day of illness for employees who are self-isolating or shielding in line with Government guidance. The Government’s SSP rebate scheme which allows business to claim up to 2 weeks’ SSP per employee also continues to operate.
A guide to eligibility due to coronavirus can be found here.
IR35 Rule Changes
From 6th April 2021, the current regime surrounding IR35 will change. These changes were due to come into place on 6th April 2020, however were deferred due to the Covid-19 pandemic. These changes will concern medium to large businesses who engage individuals who are working via a personal service company. The major change is that from 6th April it will be for the ‘client’, or ‘end user’ to determine employment status for tax purposes.
The main question to be determined is whether the individual contracted would have been an employee if there were providing services directly to the client. If this was the case, PAYE obligations would apply which include the payment of tax and National Insurance Contributions on earnings. Prior to this change, it was the responsibility of the personal service company to determine their status.
It should be noted that the ‘deemed employment status’ referred to in the IR35 regulations is for tax legislation. This is a different test to the employment test recently relied upon by the Supreme Court in the Uber decision. Our recent article on this can be found here.
From 6th April 2021 there will be an increase to the cap for weekly pay in respect of statutory redundancy payments and basic awards in tribunal claims from £538 to £544. This means the maximum statutory redundancy payment will increase to £16,320.
Moreover, there is an increase to the cap on compensatory awards for unfair dismissal claims to £82,493, or 52 weeks’ gross pay if this is lower. This increase relates to claims where the effective date of determination is the 6th April or later.
Should you have any queries about upcoming changes to the calculation of statutory entitlements or any other employment related queries, please get in touch.