While continuing to deal with the impact of coronavirus, HR professionals must ensure that their organisation complies with the usual raft of April employment law changes. In April 2021, these changes include the extension of IR35 reforms to the private sector, a tweak to the national minimum wage age bands, and increases to statutory redundancy pay and statutory maternity pay.
1. Review your contracts for IR35 in the private sector
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Reforms to the IR35 rules on off-payroll working in the private sector come into force on 6 April 2021, having been delayed by a year due to the pandemic. The rules are aimed at reducing tax avoidance for contractors employed via personal service companies.
Under the new rules, the organisation engaging the contractor is responsible for determining their employment status and assessing whether or not IR35 applies. If IR35 does apply, the organisation that pays the individual’s fees is 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 for the determination.
Employers should review their contracts and put in place the necessary procedures to ensure compliance.
- Webinar: IR35 – What HR needs to know
- Letter providing individual with status determination statement
- IR35: FAQs
2. Ensure workers are paid the national minimum wage
HR professionals should make sure that workers are being paid at least the national minimum wage that applies to them.
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.
Other national minimum wage rates also increase on 1 April 2021, with hourly rates rising to £8.36 for workers aged 21 and 22, to £6.56 for workers aged 18 to 20 and to £4.62 for workers aged 16 and 17.
- Letter advising worker of pay increase due to extension of national living wage to 23- and 24-year-olds from 1 April 2021
- Letter providing national minimum wage statement
- How to review your organisation’s pay rates against the national minimum wage
3. Update your organisation’s statutory redundancy pay calculations
Unfair dismissal compensation
The maximum compensatory award for unfair dismissal increases from £88,519 to £89,493 for dismissals that take place on or after 6 April 2021.
New limits on employment statutory redundancy pay come into force on 6 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 6 April 2021.
HR professionals should ensure that calculations for statutory redundancy payments are made on the basis of this maximum amount for redundancy dismissals on or after 6 April 2021.
- Podcast: Managing the end of a redundancy process
- How to carry out redundancies when employees have been furloughed
- Form setting out redundancy payment calculation
4. Increase statutory family-related pay and statutory sick pay
The weekly rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay increases to £151.97 from 4 April 2021.
The weekly rate of statutory sick pay increases to £96.35 from 6 April 2021.
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 these statutory minimum rates.
HR professionals also need to review their policies and documents that mention the rates, such as their maternity policies and sickness absence procedures.
- Family-friendly statutory rates
- Example family-friendly policies, letters, forms and contract clauses
- In what circumstances can an employee claim statutory sick pay?
5. Report your organisation’s gender pay gap…if you can
More employment law developments
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.
Although enforcement has been 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.
- Example gender pay gap report
- Gender pay gap reporting: the basics
- How to measure and report a gender pay gap
This article was originally published on 9 March 2021.