01/04/2021 – April employment law changes – briefing for employers
Changes are afoot, and the key dates are the 1st and the 6th April. The most notable change this year is the much dreaded extension of IR35 into the private sector, with ‘larger’ private organisations engaging contractors through an intermediary (usually a PSC) being most impacted. Our article covers the key April changes employers need to be aware of.
What’s happening with the minimum wage?
Well, it’s never going to go down is it? As well as new National Minimum Wage rates from 1st April, the top rate ‘National Living Wage’ is being extended to 23 and 24 year olds, and will increase to £8.91 per hour. For all of the rates, please see our earlier article by clicking here.
What about other key statutory rates, like SSP and the cap on a week’s pay?
Also in April, a number of statutory rates will change:
Statutory Redundancy Pay (SRP) increases to £544 per week from 6th April, meaning the maximum statutory redundancy pay-out increases to £16,320, though employers can discretionarily increase redundancy pay above the statutory limits if they wish.
Statutory Maternity, Paternity and Adoption Pay increases to £151.97 from 4th April 2021, Shared Parental Pay and the rate for Parental Bereavement Leave increases to a similar level on the same date.
Statutory Sick Pay increases to £96.35 a couple of days later, from 6 April 2021.
When does IR35 kick in for the private sector?
6th April is a busy day in the employment calendar, and made all the busier this year by the arrival of IR35, thus far confined to the public sector. Any organisation that engages a contractor through an intermediary (usually a Personal Service Company or PSC) will be impacted, and if the organisation is also the fee payer and is above a certain size (50 employees, £10.2m turnover, £5.1m balance sheet value), it will be majorly impacted, and should carry out a ‘status determination assessment’ prior to paying the April invoice to the PSC. The purpose of the assessment is to establish whether the contractor should be regarded as a worker for tax purposes, and therefore tax and NI should be paid at source and deducted from the PSC’s invoice. Once the assessment is completed the organisation must issue a Status Determination Statement (SDS) to the contractor giving reasons for why they are regarded as an ‘off payroll worker,’ or not. Confused? Our earlier article summarises our understanding of the rules and you can read it by clicking here.