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Important employment law changes in April

Important employment law changes in April

April is a busy month for both businesses and employment lawyers. There are a number of employment law changes HR Directors and employers need to prepare for.

Employment Tribunal Compensation Limit Change

The limit on the amount of compensation awarded by the Employment Tribunal for unfair dismissal will increase to £89,493. The upper limit which can be paid out will be either £89,493 or 52 weeks actual pay, whichever is the lower.

The basic award for certain unfair dismissals (including health and safety dismissals) will increase to £6,634.

These new rates will apply to dismissals where the effective date of termination falls on or after 6 April 2021.

There is no change to the limit to maximum guarantee payment which stays at £30.

Changes to Statutory Redundancy

Any Employees who are made redundant with two years' service or more receive an amount based on the Employee's weekly pay, length of service and age.

The maximum amount the weekly pay is subject to will be £544 from 6 April 2021.

The National Living Wage to Increase

On 1 April 2021, the Minimum Wage (Amendment) Regulations 2021 come into force.

The hourly rate of the National Living Wage (NLW) for working people aged 25 or over will increase to £8.91. The NLW will now apply to workers from age 23.

Other national minimum wage increases are:

  • 21-22 year rate £8.36
  • 18-20 year rate £6.56
  • Under 18-year rate £4.62
  • Apprentice rate £4.30

Employers should be aware that the regulations now require them to keep records sufficient to establish that it is paying a worker at a rate at least equal to the applicable minimum wage rate for six years. It has previously been three years.

Failure to pay the NLW can result in being publicly named and liable for a maximum penalty of £20,000.Common reasons for failing to pay the National Living Wage include:

  • Not classifying workers correctly, i.e. registering them as self-employed instead of employed.
  • Not accounting the entire time the employee spent working.

Anyone can report an employer to HMRC for not paying the minimum wage. The initial report can be anonymous.

Statutory Pay Rates annual April 2021 increases

The April 2021 annual increase to statutory payments are:

  • Statutory maternity, paternity, adoption, and shared parental pay will be £151.97.
  • Statutory sick pay weekly rate will be £96.35.

IR35 changes

On April 6, 2012, the changes to IR35 rules come into force. The off-payroll provisions require that, where there is a contract for personal services via an intermediary, an assessment must be made as to whether, if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client.

You can read more here.

More information

Please contact our employment team here if you require advice on any of these updates or on any other employment matter.

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