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2021 Employment Law Changes – what do you need to be aware of?

2021 Employment Law Changes – what do you need to be aware of? As is usually the case each April, there are a number of employment law changes which will come...

Written by: Tracey Salisbury, Senior HR Consultant MCIPD

Written by: Tracey Salisbury, Senior HR Consultant MCIPD

Tracey has worked in HR in a variety of sectors including banking, healthcare, charity and government. For the past 6 years has worked in consultancy, advising businesses of a range of sizes and industries on all their HR needs. Tracey is MCIPD qualified, and also holds IOSH and Job Evaluation accreditations. She leads on our Outplacement Service, using her skills in professional CV writing, interviewing and job searching to support employees post-redundancy or post-termination.

Tracey has worked in HR in a variety of sectors including banking, healthcare, charity and government. For the past 6 years has worked in consultancy, advising businesses of a range of sizes and industries on all their HR needs. Tracey is MCIPD qualified, and also holds IOSH and Job Evaluation accreditations. She leads on our Outplacement Service, using her skills in professional CV writing, interviewing and job searching to support employees post-redundancy or post-termination.

2021 Employment Law Changes – what do you need to be aware of?

As is usually the case each April, there are a number of employment law changes which will come into force next month.   The main ones being:

  • Statutory Rate Increases

SSP will rise from £95.85 per week, to £96.35 per week, from 6th April.

Family leave (including maternity and paternity) will rise to £151.97 on 4th April.

  • Minimum Wage Increases

Minimum wage will increase with effect from 1st April 2021.  The biggest change this year is the eligibility for the adult (national living wage) rate of National Minimum Wage.  This will decrease to 23 years old, instead of the current level of 25, meaning a big increase for workers who are 23 and 24 years old.

  • Redundancy Maximum Weeks’ Pay

The cap on a week’s pay for redundancy purposes will increase from £538 to £544 on 6th April.    The statutory lay off / statutory guarantee pay remains unchanged at £30.

  • Tribunal Award Increases

The maximum rate for maximum statutory redundancy pay, and the basic pay for unfair dismissal will both increase to £16,320.

The unfair dismissal compensatory award (compensating for past and future loss linked to the dismissal) will be based on a maximum of 52 weeks’ pay, subject to a maximum of £89,493.

The additional unfair dismissal award (compensation for employers failing to reengage employees as per tribunal instruction) will increase to £28,288.

  • IR35

The IR35 legislation looks at the levels of tax paid by contractors.  Under current rules, contractors generally determine their own tax status, and whether they are an employee or employer.

From 6th April 2021, this liability will be passed to the client – who will need to determine whether contractors fall “inside” or “outside” of IR35.

This assessment could potentially have an impact on how that individuals services are therefore engaged and may result in individuals needing to be taken on as employees of the company, as opposed to freelancers/contractors.

From April this year, this will affect medium and large-sector clients, however IR35 is predicted to roll out to all contractors.  For smaller companies, the contractor will (at present) remain liable for determining their own tax status.

This is an area you should be aware of, in order to ensure that your staff and contractors are employed on the appropriate terms and contracts and also to ensure your compliance with the legislation and determination of status.

In addition to the changes detailed above, there are a couple of other ongoing areas which you will be no doubt dealing with during this year –

Brexit remains an ongoing development – with the application period for individuals to apply for settled or pre-settled status ending at end June 2021.  For organisations who employ staff from overseas, you will be required to obtain the necessary sponsorship licence to enable you to do so (with effect from 1st January this year).

Furlough – the Coronavirus Job Retention Scheme (CJRS) is in place until end September 2021.  The government will continue to cover the cost of unworked wages up to 80% (subject to the cap), until June 2021.  From July, the employer will cover 10% of this figure, and for August and September the employer will cover 20%.

Be prepared and plan ahead

As with any changes to staff, terms and conditions, structures or working practices, there are statutory processes which you need to follow in order to ensure a fair process.   Some of these consultations and processes can take time (with some having timescales determined by legislation).

If you are planning any changes to your workforce, or have any questions relating to IR35, Brexit, or any other employment law changes please contact us for advice.

Our retained packages (including compliance) provide you with the necessary support and reassurance to ensure you remain compliant and adhere to the necessary procedures to avoid tribunal action.

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