As April swiftly approaches, there are many changes to employment law anticipated to be introduced over the next month.
Due to the attention being focussed on COVID-19, Brexit and the Budget, HR may need to be reminded of some key employment law changes. Kate Palmer, HR Advice Director at Peninsula, a global employment law consultancy, outlines them here.
1. Employment Tribunal Compensation Awards and Rates
It has been confirmed that employment tribunal compensation rates are to increase from 6 April 2021. As of this date, the maximum week’s pay for redundancy pay purposes will increase from £538 to £544; however, statutory guarantee pay will be staying at £30.
This is important for the purposes of tribunal claims because it means that the maximum statutory redundancy pay, as well as unfair dismissal basic award pay, will both now be £16,320. The unfair dismissal compensatory award, which is set to compensate the claimant for past and future lost attributed to the dismissal, is a maximum of 52 weeks’ pay, subject to a new maximum of £89,493.
The maximum amount of additional award for unfair dismissal, set to compensate claimants when employers fail to adhere to a tribunal instruction to re-engage them, taking into account average weekly earnings, will rise to £28,288.
2. Statutory Sick Pay
Statutory Sick Pay (SSP) refers to the amount that employers must pay eligible employees if they are too ill to work. At present, it is paid for up to 28 weeks. SSP is currently available to people who are self-isolating, either because they or someone in their household has COVID-19. Outside of this, SSP is available for employees from the fourth day they are sick.
To be eligible for SSP, an employee must earn an average of £120 a week minimum and have been ill, self-isolating or shielding for at least four days in a row (including non-working days).
Kate Palmer reflects on the changes that are to come:
The current rate is £95.85 per week since 6 April 2020 and is set to rise to £96.35 from 6 April 2021. The lower earnings limit in relation to eligibility to statutory payments is to stay the same at £120 per week.
3. Family leave
The weekly rates of statutory family leave – e.g. maternity/paternity leave, etc. will increase by 77p per week on 4 April 2021, from £151.20 per week to £151.97 per week.
4. Minimum wage rates
As Rishi Sunak announced in the Budget, from 1st April 2021, national minimum wage rates are also set to increase. The new hourly rates are as follows:
- Workers aged 23 and over (National Living Wage) – £8.91
- Workers aged 21-22 – £8.36
- Development rates for workers aged 18–20 – £6.56
- Young workers rate for workers aged 16–17 – £4.62
- Apprentices under 19, or over 19 and in first year of the apprenticeship – £4.30.
As seen above, the National Living Wage (NLW) threshold is lowering to include all those aged 23 and over. Currently, the NLW is payable only to people who were aged 25 and over.
The IR35 legislation, which aims to ensure that contractors are paying the appropriate amount of tax, is also changing for some private sector businesses.
Currently, most contractors are required to determine their own status as employee or contractor; however, from 6 April 2021, this liability will pass to medium and large-sector clients. Smaller clients will be exempt from this obligation, and the contractor remains liable for determining their own tax status.