Employment Law 2021: Changes You Need to Know About

Most business owners are currently distracted by Coronavirus and ensuring they manage the needs of their staff working remotely. There are a lot of things to consider. However, there will be changes to the employment law 2021, and it is important to be aware of these. You will need to put measures in place to ensure your business is complying with these. These are some of the changes to the employment law 2021.

National Minimum Wage and National Living Wage

Employees aged 23 and over (current age is 25 and over) will be entitled to the National Living Wage from the 1st of April 2021. The rate will increase from £8.72 to £8.91. You must pay any employees aged 23 and over an hourly rate of £8.91. The National Minimum Wage will also increase for all other age groups. Employees aged 21-22 will be entitled to an hourly rate of £8.36, employees aged 18-20 will be entitled to £6.56 per hour, under 18’s will be £4.62 and apprentice level will be entitled to £4.30 per hour. You must update your payroll records in plenty of time before this legislation takes effect.

IR35 Changes for Private Sector

The IR35 changes were postponed during the Coronavirus pandemic, and they will now apply from 6th April 2021. Employers should ensure that they are complying with the IR35 regulations. It means reviewing your current contracts to determine whether contractors sit outside IR35 or inside IR35. Working inside IR35 means that a worker is working as if they are employed; rather than self-employed. It means that, as a business, you will have more tax to pay. If you want to ensure any of your workers remain outside IR35, you should update any contracts to reflect the difference. For instance:

  • The contract should state that the contractor can be substituted at any time if necessary. The contract should not have set and breaks and lunches.
  • The worker should not need to request holidays; they should only be informing you about a holiday.

These are just a couple of areas to look at but the full contract will need to be analysed to represent a self employed worker.

If the contract states that the contractor is working in the same way as employees; and under the same regulations and restrictions, you will have trouble proving that they are outside IR35.

Redundancy Pay Limits

The employment law 2021 states changes to limits on statutory redundancy pay from the 6th of April 2021. The limit will be £544 per week, and you must update your systems to reflect this important change.

Other Statutory Increases

The weekly statutory rates will increase for maternity, adoption, paternity, bereavement, and shared parental from 4th April 2021. This figure will be £151.97. Statutory sick pay will also increase to £96.35 on the 6th of April 2021. You must ensure your policies and systems are updated to reflect these changes.

Settled Status

You should be mindful of the settled status that may affect EEA residents. According to the new employment regulations since Brexit, residents within the EEA, living in the UK, will need to apply for pre-settled or settled status, under the EU settlement scheme. They must do this by 30 June 2021. It is a straightforward process, and you should ensure all your employees have completed this on time.

If you want further clarification on the UK employment law 2021 or if you have any other HR issues, you can email melanie@bluetreehr.uk or call 07516 335 419.

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