Changes to the Employment Law in April 2021

Be a responsible employer and get ready for the 2021 employment law changes. Some of these legislations & responsibilities are coming into effect as early as next month, find out what key actions to take in order to stay compliant in this article. 

The HR Team at Goodwille together with the Finnish-British Chamber of Commerce and Danish-UK Association hosted a webinar on this topic:

A few months into 2021 and we continue to see a massive global transformation affecting businesses. The year started with the UK officially leaving the European Union and continued with the Covid-19 pandemic resulting in changes in the movement of talent across borders and practical problems having many workforces working from home. Yet, there are more changes to come – in addition to responsibilities to follow regarding Brexit and Covid-19 there are expected updates in the employment law to start preparing your business for.  

Employment Law changes in April 2021

6 April, also known as the start of the new tax year, is quickly approaching. This corporate threshold does not only entail major financial action to businesses but for the year ahead there are also multiple changes in regards to HR legislation and responsibilities that companies need to be aware of.

1. Pay Increases

Increased National Minimum Wage

The National Living Wage is extended to workers aged 23 and over and increases to £8.91 per hour. The National Minimum Wage increases to: 

• £8.36 for 21 to 22-year-olds
• £6.45 for 18 to 20-year-olds
• £4.62 for 16 to 17-year-olds
• £4.30 for apprentices 

Increase to Family Leave Pay

The rate of statutory maternity pay, paternity pay, adoption pay, shared parental leave and parental bereavement pay increases to £151.97 per week for up to 39 weeks. Employers can however offer enhanced family leave packages. 

Increase to Statutory Sick Pay

The Statutory Sick Pay increases to £96.35 per week for up to 28 weeks and kicks in if a person is sick for more than 4 days in a row including non-working days. If a person is sick for more than 7 days including weekends, the employee needs to provide a fit note. 

Increase to Parental Bereavement Pay 

Both parents may be able to take 2 weeks of paid leave if their child passes away before they turn 18, or if they have a stillbirth after 24 weeks of pregnancy. 

2. Gender Pay Gap reporting 

The gender pay gap shows the difference in the average pay between all men and women in the workforce and is aimed to ensure that companies manage, develop and reward people fairly irrespective of what gender they are. Organisations with 250 or more employees must report their gender gap figures annually.

Due to the continuing impact of the Coronavirus pandemic, employers will have an additional 6 months after the current deadline to report their gender gap information. The new deadline is set for 5 October 2021. 

3. IR35

The changes to the off-payroll working rules to the private sector, which were delayed a year due from 6 April 2021. The IR35 legislation applies “if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly” (gov.uk). The reasoning behind the legislation is to make sure contractors who are working through an intermediary are being taxed and charged for National Insurance similarly as if they were employees.

Commencing in April, changes have been made in terms of who is responsible for determining whether the IR35 rules apply to the individual case. The change puts more pressure on medium and large-sized private clients rather than the intermediaries directly employing the contractor. The risk of hefty financial penalties is thereby transferred to those clients.

If you fall into the category of medium-large business then you need to prepare your business, so identify which contractors are affected to then inform them and prepare for potentially adding them to payroll. 

A small company is if the company meet 2 out of these 3 conditions:

• Annual turnover must be 10.2 million or less 
• The balance sheet must be £5.1 million or less
• The average number of employees must be 50 or less

We wrote a more detailed article on the updated IR35 legislation here.

4. Extension of the furlough scheme 

The furlough scheme has protected more than 11 million jobs in the UK since it was first introduced in March 2020. The scheme was due to end in April 2021, but thanks to the extension, the furloughed workers will continue to receive 80% of their wages (capped at £2,500 per month) until the end of September 2021.

However, with the economy expected to slowly reopen in summer, the employers will be asked to contribute 10% from July and then 20% from August towards their employees’ wages. The employer still needs to pay pensions and NI contributions. 

What happens if I don’t comply with the new employment law changes?

Complying with the updated employment laws and directives are not just important from a legal standpoint, but also from a Corporate Social Responsibility one. Companies must prioritize to be a good and responsible employer for the sake of their stakeholders, who also are increasingly aware of corporate behaviour.

If you are concerned or want help with your compliance do not hesitate to contact our HR Manager at jacqui.brown@goodwille.com or visit www.goodwille.com/human-resources. Goodwille can act as a fully outsourced HR service provider or support chosen areas of your HR functions.

Goodwille provides essential business services to foreign-owned businesses looking to enter, grow or scale in the UK, to find out more visit goodwille.com.