April is the usual month for legislative changes and increases in statutory rates and this year is no exception. From a significant extension of the scope of the National Minimum Wage to the introduction of the off-payroll working rules to the private sector, there are many developments unconnected to the current pandemic that employers and HR professionals need to be aware of.
Increase in statutory rates and limits
Increase in National Minimum Wage
From 1 April, there is a significant change to the scope of the National Living Wage (NLW) with a reduction in the age threshold. The NLW is payable to workers aged 23 and over rather than workers aged 25 and over as it was previously.
From 1 April, the NLW and the National Minimum Wage (NMW) increase as follows:
- For workers aged 23 and over from £8.72 to £8.91
- For workers aged 21 – 22 from £8.20 to £8.36
- For workers aged 18 – 20 from £6.45 to £6.56
- For workers aged 16 – 17 from £4.55 to £4.62
- Apprenticeship rate from £4.15 to £4.30
Employers need to identify those workers aged 23 and 24 who are to benefit from the NLW so that they can inform them of the increase in their pay and employers also need to notify their HR department or payroll services about the change. The increase in the NLW rate to £8.91 represents an increase of 2.2%. Note that the age threshold will reduce again to those aged 21 and over by 2024.
Increase in statutory rates for family leave
Statutory maternity, adoption, paternity, shared parental leave and parental bereavement leave pay increases from £151.20 a week to £151.97 (or 90% of average weekly earnings if this is less than the statutory rate).
If HR policies on family friendly rights refer specifically to the statutory rates these will have to be updated. Members of staff who are about to take family leave need to be informed of the increase in rates.
Increase in statutory sick pay
The weekly rate of statutory sick pay increases from £95.85 to £96.35.
Increase of limits on Employment Tribunal awards
In cases involving dismissal, the limit on a week’s pay, for calculating the basic award, increases from £538 to £544 where the effective date of termination falls on or after 6 April.
The maximum compensatory award for unfair dismissal increases from £88,519 to £89,493.
The most recently published Employment Tribunal quarterly statistics (published on 11 March) show a 25% increase in single Employment Tribunal claims received and an increase in outstanding caseload of 36%. This is almost certainly due to the impact of the coronavirus pandemic on the economy and the significant increase in unemployment. The increase in claims is likely to continue and could be further accelerated when the furlough scheme ends. Interestingly, minutes published in February by the England and Wales Employment Tribunals national user group also revealed a continued rise in the outstanding caseload and increase in pandemic-related claims. These included claims for unfair dismissal for redundancy reasons, public interest disclosure claims for misuse of the furlough scheme and for health and safety issues such as PPE and claims for unpaid holiday especially during periods of furlough.
Don’t forget that the week’s pay limit also applies to the calculation of the statutory redundancy payment. Employers will need to be aware of the new limit if embarking on redundancy exercises in the weeks and months ahead.
For more details of other statutory rates and limits see our Handy Fact Card 2021/2022.
Increase in Vento bands
For claims presented on or after 6 April, the Vento bands for injury to feelings awards are as follows:
- Lower band of £900 to £9,100 (for less serious cases)
- Middle band of £9,100 to £27,400 (for cases that do not merit an award in the upper band)
- Upper band of £27,400 to £45,600 (for the most serious cases) and note that the most exceptional cases are capable of exceeding £45,600.
Off-payroll rules in the private sector
The off-payroll working rules tightening up on IR35 compliance were due to be extended to the private sector on 6 April 2020 but were postponed because of the coronavirus pandemic. The new date for implementation is 6 April. Even though there has been an additional year to prepare, level of awareness among some organisations is low. With implementation only days away, preparation for the new rules is essential and key to this is gathering the relevant data in relation to any contractor relationships. HMRC will look at the relationship in the round so it is important the contractual terms reflect the day-to-day relationship between the parties.
Blake Morgan can assist with your data gathering exercise and the assessment of your contractor terms of engagement. For more details on IR35 see here.
Post-employment notice pay (PENP)
There is change to the formula in relation to PENP where the employee’s pay period is expressed in months but the contractual notice period is expressed in weeks or days or where the post-employment notice period is not a whole number of months. Although HMRC has used its managerial discretion to allow this adapted formula since October 2019, it is now secured in legislation where the termination payment is received on or after 6 April 2021. The reason for the change is to remove the inconsistency and unfair outcomes to ensure that PENP does not vary according to the number of days in the monthly pay period.
In addition, the draft legislation changes the so-called “simplified formula” for employees whose contractual notice period is expressed in months, whose last pay period was a month, and whose post-employment notice period was a whole number of months. It will introduce an additional requirement that their basic pay is paid in equal monthly instalments. This appears to limit the “simplified formula” to annual salaried staff, since it will affect predominantly hourly paid employees who are paid monthly but whose pay varies depending on the length of the month – the standard formula will have to be used for them.
Claims under the furlough scheme for March must be submitted by 14 April.
The extensive Government guidance about the scheme has been updated to take account of last month’s Budget announcement that the furlough scheme will be extended to 30 September (it was due to end on 30 April). There are some changes to the scheme however. While the Government’s contribution to employees’ wages remains at 80% for hours not worked up to a cap of £2,500 a month this is only to the end of June. Employers will then be required to contribute to wages for hours not worked, specifically, 10% from July and 20% in August and September. There is no change to the requirement that employers have to pay employer NICs and minimum pension contributions.
For claim periods ending on or before 30 April, employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020.
Note that for claim periods starting on or after 1 May, employers can claim for employees who were employed on 2 March 2021, as long as they have made an RTI submission to HMRC between 20 March 2020 and 2 March 2021. Significantly, this means that those who cannot be furloughed because they were not employed before 31 October 2020 under the previous rules can now be furloughed from May onwards as long as they were employed by 2 March.
For more details of the furlough scheme and the extension see our recent articles.
Gender pay gap reporting
Arguably, there is no need to mention the usual reporting deadline of 4 April because of the recently announced six months suspension of the enforcement provisions. By way of a reminder, the deadline for reporting in the private and voluntary sector is 4 April and 30 March for the public sector.
Because of the first national lockdown in March 2020, the Government decided that employers did not have to report their data for the reporting year 2019/2020.
Rather than have a second year with no obligation to report, the Equality and Human Rights Commission announced that due to the ongoing impact of COVID-19, enforcement of gender pay gap reporting for 2020/2021 will not begin until 5 October 2021. Regardless of this six months suspension, employers can of course continue to collate the data and report by the deadline of 4 April if they choose. Many employers however will welcome the additional time they now have to report.
If you would like to know more about developments over the next few months or are interested in catching up on recent case law developments, we are holding an Employment law webinar on 22 April. For more details of the topics we are covering and how to join please see here.
The latest immigration statement of changes (mostly coming into force on 6 April 2021) and related Government announcements were published on 4 March 2021. The most relevant points are:
Graduate route – applications in this category will be accepted from 1 July 2021. International sponsored students will be able to apply under this route to remain in the UK for two years (or three years for doctorate students). Importantly for employers, those granted a graduate visa will be able to work in the UK freely without sponsorship.
Shortage Occupation (Skilled Worker category) – a number of planned additions to the shortage occupations list within the health and care sectors have also been announced – amongst others pharmacists, physiotherapists and senior care workers. Although skilled chefs are being removed, they continue to be eligible under the category due to the general lowering of the skills level and salary thresholds. Despite the removal of resident labour market test, the shortage occupation list is still of interest since these jobs may qualify for lower salary thresholds.
EU Settlement Scheme – is due to close to most applicants on 30 June 2021. However, a limited concession has been published. This provision will enable applicants to rely on ‘reasonable grounds for missing the deadline’. It is uncertain how this rule is going to be applied and it is never advisable to rely on discretion. All employees should be encouraged to apply in good time before the deadline and the above concession should be treated as a last resort.
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