The following employment law changes are coming into force in April:

IR35 in the private sector

On 6 April 2021 the off-payroll working (IR35) rules will be extended to the private sector. End user clients (other than small companies which fall below certain thresholds) will need to assess all off-payroll workers to determine:

  • if they are operating through an intermediary such as a personal service company (PSC); and
  • if they are, whether they would be taxed as an employee for tax purposes were it not for the PSC.

If it is determined that the worker would be an employee for tax purposes, the entity which pays the PSC (which may be the end user client or a UK employment business in the chain) needs to account for PAYE income tax and employee and employer NICs.

End-user clients will also need to set up processes for making status decisions; communicating status determination statements (with reasons) to workers and other parties they have contracted with in the chain; and dealing with disputes.

It’s expected that the changes from April will have a significant impact on the way in which businesses engage with off-payroll workers. More information is available on Brodies' IR35 hub.

New statutory rates

  • The maximum unfair dismissal compensatory award will increase to £89,493 (from £88,519). Consequently, for any dismissals which take effect on or after 6 April 2021, the cap on the compensatory award will be the lower of £89,493 or 52 weeks' pay.
  • The limit on a week's pay used to calculate certain statutory payments and provisions will rise to £544 (from £538). As a result, the maximum basic award / statutory redundancy payment will be £16,320 from April.
  • Statutory sick pay will increase to £96.35 per week (from £95.85) from 6 April 2021.
  • Statutory maternity, adoption, shared parental, paternity and parental bereavement pay will increase from £151.20 to £151.97 per week from 4 April 2021.

Increased national minimum wage rates

The following national minimum wage hourly rates will be effective from 1 April 2021:

  • The national living wage (workers aged 23 and over): £8.91
  • The standard adult rate (workers aged 21-22): £8.36
  • The development rate (workers aged 18-20): £6.56
  • The young workers rate (workers aged 16 and 17 who are not apprentices): £4.62
  • The apprentice rate (apprentices under 19 or aged 19 or over and in the first year of apprenticeship): £4.30

The national living wage is being extended to 23 and 24-year-olds for the first time. Previously, it only applied to people aged 25 and over.

Delay to enforcement of gender pay gap reporting

The Equality and Human Rights Commission has advised that it will delay enforcing gender pay gap reporting for the year 2020/21 until 5 October 2021, meaning the last date for publishing a report is now 4 October 2021 for both private and public sector employers, rather than 4 April (private sector) or 30 March (public sector). Employers are being encouraged to submit their data before October where possible.

Future HR agenda

For a look at the wider HR agenda for the remainder of 2021 and beyond, have a look at HR, employment & immigration: your 2021 to-do list which we published in January. Please get in touch for more information, or if you would like help with policy development.