Changes with effect from 6 April 2021:
- A statutory week’s capped pay (used, for example, to calculate statutory redundancy payments), increases from £538 to £544;
- The compensatory cap for unfair dismissal claims will increase from £88,519 to £89,493 (subject to the additional cap of 52 actual weeks’ pay if lower);
- The National Minimum/Living Wage rates will increase from £8.72 per hour (gross) to £8.91 per hour for those over 23 years*. In addition:
- Workers aged 21-22 = £8.36
- Workers aged 18-20 = £6.56
- Workers aged 16-19 = £4.62
- Apprentice rate = £4.30
*The National Minimum/Living Wage top bracket now applies to those 23 and over, rather than, as previously, 25 and over;
- Statutory sick pay will increase from £95.85 to £96.35 per week; and
- Statutory Maternity Pay (and other paid statutory family leave) will increase from £151.20 to £151.97 per week.
Good Work Plan changes
Implementation of the following is expected this financial year:
- Workers to be given right to request a more stable contract after 26 weeks’ service;
- New legislation to adopt the employment status test;
- New law will be implemented preventing deductions from tips; and
- Greater redundancy protection to mothers returning to work after maternity leave.
Off payroll working rules (IR35) for private sector businesses
The IR35 rules will be extended to the private sector from 6 April 2021, following the delay from last year where:
- you have an annual turnover of more than £10.2 million;
- you have a balance sheet total of more than £5.1 million; or
- you have more than 50 employees.
The responsibility for deciding whether the amended off-payroll working rules apply will fall on the organisation receiving the individual’s services.
HMRC has issued its guidance in this respect which can be found at https://www.gov.uk/guidance/prepare-for-changes-to-the-off-payroll-working-rules-ir35. The guidance lays out the four key steps an organisation should take in order to ensure a smooth transition, including identifying affected individuals and implementing new processes to ensure the organisation is prepared.
Businesses should ensure that, if they have any contractors who work via intermediaries, clients or agencies, they have an action plan to review their current arrangements, their internal systems and their policies should the changes apply to them.
Extension of the Coronavirus Job Retention Scheme (CJRS)
As announced as part of the Budget, the CJRS has been extended until the end of September 2021.
Employees on this scheme will continue to receive 80% of their salary for hours not worked.
Employers will, however, be required to contribute towards the cost of the unworked hours from July 2021, as follows:
- 10% contribution from 1 July 2021; and
- 20% of the cost from 1 August (through to the end of September) 2021.
Employees must continue to receive at least 80% of pay, subject to the monthly cap of £2,500, for their furloughed hours.
Employers are also required to pay all associated employer’s National Insurance contributions and pension contributions, as well as meet all costs relating to any hours’ employees work.
The Self-Employment Income Support Scheme (SEISS) is also being extended with a fourth grant covering the period February to April 2021 and a fifth and final grant covering May to September 2021.
There will also be a continuation of tax exemptions for COVID-19 tests and home office expenses, and of the Statutory Sick Pay (SSP) Rebate Scheme.