Don’t forget these essentials this Easter
- the extension of IR35 reforms to the private sector
- a tweak to the national minimum wage age bands
- increases to statutory redundancy pay and statutory maternity pay.
Review your contracts for IR35 in the private sector
Reforms to the IR35 rules on off-payroll working in the private sector come into force on 6 April 2021, having been delayed by a year due to the pandemic. The rules are aimed at reducing tax avoidance for contractors employed via personal service companies.
Under the new rules, the organisation engaging the contractor is responsible for determining their employment status and assessing whether or not IR35 applies. If IR35 does apply, the organisation that pays the individual’s fees is deemed to be their employer for tax and national insurance purposes.
Once the organisation has determined an individual’s classification, it must provide a status determination statement to the individual and to the party with which the organisation has contracted. For the statement to be valid, the client must also provide reasons for the determination.
Employers should review their contracts and put in place the necessary procedures to ensure compliance.
Ensure workers are paid the national minimum wage
Businesses should make sure that workers are being paid at least the national minimum wage that applies to them.
The national living wage (the highest band of the national minimum wage) increases to £8.91 per hour on 1 April 2021.
In addition, the age threshold for the national living wage is amended so that it applies to 23- and 24-year-old workers from 1 April 2021. Previously, the national living wage was available only to those aged 25 and over.
Other national minimum wage rates also increase on 1 April 2021, with hourly rates rising to £8.36 for workers aged 21 and 22, to £6.56 for workers aged 18 to 20 and to £4.62 for workers aged 16 and 17.
Update your organisation’s statutory redundancy pay calculations
New limits on employment statutory redundancy pay come into force on 6 April 2021.
Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. This amount is £544 from 6 April 2021.
Businesses should ensure that calculations for statutory redundancy payments are made on the basis of this maximum amount for redundancy dismissals on or after 6 April 2021.
It is pertinent to note here that the maximum compensatory award for Unfair dismissal increases from £88,519 to £89,493 for dismissals that take place on or after 6 April 2021.
Increase statutory family-related pay and statutory sick pay
The weekly rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay increases to £151.97 from 4 April 2021.
The weekly rate of statutory sick pay increases to £96.35 from 6 April 2021.
It is up to a business to make sure that staff on maternity leave, paternity leave, adoption leave, shared parental leave, parental bereavement leave and sick leave are paid these statutory minimum rates.
Businesses also need to review their policies and documents that mention the rates, such as their maternity policies and sickness absence procedures.
There is a lot for anyone involved in the HR function of a business to contend with in normal circumstances but with all the added requirements of dealing with the Coronavirus it will be easy to miss some of these vital changes that must be adhered to this April.
For a free no strings, confidential initial half hour conversation on how we can help your business to ensure it complies with all of these requirements and/or to discuss any other HR issues you may need assistance with please get in touch by calling us on 01792 296 178, or email us at email@example.com or visit our website here to book a call back.