Hannah Johnson


DATE PUBLISHED: 07 Apr 2021 LAST UPDATED: 01 Nov 2022

Important employment law changes during April 2021

Since 1 April 2021, there have been several notable changes that have come into effect, which will impact both individuals and businesses, the key changes of which are noted below:

1 April 2021: National Living Wage and National Minimum Wage rates increased

The Government reviews these rates annually, which take effect each April.

Since 1 April 2021, the National Living Wage threshold now applies to workers aged over 23 (currently you need to be over 25).

National Minimum Wage and National Living Wage rates have increased as follows:

Category Rate from 1 April 2021
Age 23 and over £8.91
Age 21 to 22 £8.36
Age 18 to 20 £6.56
Under 18 £4.62
Apprentice £4.30

4 April 2021: family-related pay increased

The weekly rate for statutory family-related pay has increased from £151.20 to £151.97 per week.

This rate applies to the following Statutory Pay: Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement. The amount paid will be the lower of: 90% of the employee’s average weekly earnings, or the statutory rate.

4 April 2021: Statutory Sick Pay (SSP) rate increased

Statutory sick pay has increased from £95.85 to £96.35 per week.

6 April 2021: statutory redundancy payments increased

The cap on a week’s pay for the purposes of calculating redundancy payments (and the basic award in unfair dismissal claims) has increased from £538 to £544.

The maximum statutory redundancy payment has increased from £16,140 to £16,320.

6 April 2021: compensation for unfair dismissal claims increased

The basic award in an unfair dismissal claim will be calculated in the same way as a statutory redundancy payment above.

In addition to the basic award, employee’s can claim a compensatory award.

The maximum compensatory award for unfair dismissal claims increased from £88,519 to £89,493 (or 52 weeks’ gross pay if lower).

This increase effects dismissals where the effective date of termination is on or after 6 April 2021.

6 April 2021: IR35 reforms take effect in the private sector

IR35 rules are designed to reduce tax avoidance for off-payroll contractors who provide services through an intermediary (usually their own personal service company). The rules ensure that workers who would be classed as employees if they were contracted directly are liable to pay the appropriate tax and National Insurance as employees.

Currently, it is the intermediary’s responsibility to decide whether IR35 applies for each contract.

On 6 April 2021, the onus will shift to the end user to decide IR35 status for each contract entered into on or after this date, together with the responsibility for deducting the appropriate tax and NICs from contractors’ fees paid through the intermediary fees. This will apply to businesses in the private sector who meet 2 or more of the following criteria:

  • Annual turnover of more than £10.2 million;
  • Balance sheet of more than £5.1 million; and/or
  • Have more than 50 employees.

This has applied to public sector employers since April 2017.

It is crucial for business review all existing contracts and pay arrangements with independent contractors to determine if IR35 applies or is likely to apply. Businesses must keep records of each determination, whether the outcome is that IR35 will apply or not. Contracts will need to be re-assessed in the same manner if working practices change or a new contract is negotiated.

If you have any queries in relation to this, or questions as to whether IR35 applies to your business,  please do not hesitate to contact one of our experienced Employment Lawyers on 01202 525333 or employment@ellisjones.co.uk for further advice.

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