Government reforms (5):  April changes – a reminder

Increase in National Living and Minimum Wage – 1 April 2021

As we updated you in our December 2020 Newsletter Government reforms (3): Increase in national living and minimum wage, the National Living Wage, which currently only applies to workers aged 25 or over, increased by 2.2% and was extended to 23 and 24-year-olds for the first time.

• Age 23 plus: National Living Wage increase from £8.72 to £8.91 per hour;
• Age 21 to 22 (inclusive): increase from £8.20 to £8.36 per hour;
• Age 18 to 20 (inclusive): increase from £6.45 to £6.56 per hour;
• Age 16 to 17 (inclusive): increase from £4.55 to £4.62 per hour;
• Apprentice rate: increase from £4.15 to £4.30 per hour.

Gender Pay Gap Reports  – 4 April 2021

Employers with 250 or more employees are normally required to publish their gender pay gap report by 4 April (and 30 March for public-sector employers).

However, as we updated you in our Newsletter 2021 Issue 2 2020/21 Gender Pay Gap Reporting Deadline extended, due to the pandemic, enforcement of the gender pay gap reporting duty for the 2020/2021 is delayed for six months, and does not begin until 5 October 2021.  This means that employers are still required to report their figures, but have an extra six months in which to do so before enforcement action begins.

Increased statutory rates for maternity (SMP), paternity (SPP), shared parental pay (SSPP), adoption (SAP) and sick pay (SSP)

Statutory rates for everything other than sick pay increased from £151.20 to £151.97 per week or 90% of average earnings if lower – 5 April

Statutory sick pay (SSP) increased from £95.85 to £96.35 per week – 6 April

Lower earnings limit

The amount of the weekly lower earnings limit that applies to National Insurance contributions (below which employees are not entitled to SMP, SPP, SAP, SSPP and SSP) remains the same at £120.

Increases in Statutory Redundancy Pay, other statutory payments and Tribunal awards

The usual annual increase in statutory payments and Tribunal awards include the:

• maximum limit for a statutory week’s pay (used to calculate statutory redundancy payments and the basic award for unfair dismissal) from £538 to £544;
• maximum compensatory award for unfair dismissal from £88,519 to £89,493. (Although the award is unlimited for certain automatically unfair dismissals, for example, health and safety or whistleblowing); and
• maximum basic award for unfair dismissal and statutory redundancy payment from £16,140 to £16,320. That makes the maximum total basic and compensatory awards for unfair dismissal £105,813 (generally subject to a limit of 52 weeks’ actual pay).

The new rates take effect where the ‘appropriate date’ for the course of action, such as the date of termination in an unfair dismissal claim, falls on or after 6 April 2020.

IR35

The reforms to IR35 were finally introduced on 6 April 2021 (as we updated you in our April 2020 Newsletter Government reforms (3): IR35 reforms – delayed!) for medium and large businesses in the private sector.

For more information on the changes to IR35 see our Blogs here. In summary, the reforms shift responsibility from the contractor to the end-user to assess whether IR35 applies (i.e. if there is deemed employment).  If it does, then it will be that end-user’s liability to deduct tax and NICs through PAYE and it will be held liable if HMRC decides the assessment is incorrect.

The changes apply to services carried out (in full or in part) on or after 6 April 2021 and are likely to significantly increase the administrative and compliance burden on medium and large businesses which engage consultants via intermediaries (such as a Personal Service Company). We therefore recommend prioritising preparation for these changes.

Increase in Discrimination Awards

There are three levels of bands for compensation for injury to feeling as a result of discrimination (known as ‘Vento’ bands, after the 2002 case by that name).  Awards for injury to feelings are made to employees for the hurt caused when they have been treated in a discriminatory way which is unlawful under the Equality Act 2010.

The ‘Vento’ award bands for claims presented on or after 6 April 2021 are:

• £900 to £9,100 for the lower band””less serious cases;
• £9,100 to £27,400 for the middle band;
• £27,400 to £45,600 for the upper band””the most serious cases; and
• £45,600 and above for the most exceptional cases.