Newsletter: April 2021

Welcome to the April edition of the AdviserPlus Newsletter.

In this month’s newsletter, we will be focusing on the latest employment law changes that have come into force this month including the extension of the IR35 reforms to the private sector, a tweak to the national minimum wage age bands and increases to statutory redundancy pay and statutory maternity pay.

We will also revisit responsibilities regarding the gender pay gap and the latest updates on the Coronavirus Job Retention Scheme and EU Settlement Scheme.


Extension of IR35 reforms

Employers should be reviewing their contracts in order to put in place the necessary procedures to ensure compliance of the reforms that have come into force on 6th April 2021. After being delayed for 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, any organisation engaging a contractor is responsible for determining their employment status and assessing whether or not IR35 applies. If it does, the organisation that pays the individual’s fees is deemed to be the employer for tax and NI purposes.

Once the individual’s classification has been determined, the organisation must then provide a status determination statement to the individual and to the party with which the organisation has contracted. The client must also provide reasons for the determination in order for the statement to be valid.

It can be extremely difficult to work out if some-one is an employee or a worker and ultimately both the Employment Tribunals and HMRC can make decisions about employment status but they can also reach different conclusions. Something to be aware of is that with IR35, it is possible for some-one to be classified as one thing for tax purposes and another for the purpose of key employment law rights.


National Minimum Wages

The national living wage (the highest band of the national minimum wage) has now increased to £8.91 per hour (commencing 1st April 2021).

Another important change to note is that the age threshold for the national living wage now applies to 23-24 year old workers whereas, previously is applied to those aged 25 and over.

Other national minimum wage rates are as follows:

  • £8.36 for workers aged 21-22 (up2%)
  • £6.56 for workers aged 18-20 (up 1.7%)
  • £4.62 for workers aged 16 and 17 (up 1.5%)
  • Apprentices: £4.30 (up 3.6%)

Remember, apprentices aged 19 or over who have completed their first year must be paid at least the minimum wage rate for their age.

As well as HMRC fines, failing to pay workers correctly may leave the door open to Employment Tribunal claims, so it is important to get this right and it is also worth revisiting employees’ pay after birthdays, as they may have moved into the next wage bracket.


Statutory Redundancy Payments

When calculating an employee’s redundancy, it is based on the employee’s weekly pay, length of service and age and the weekly pay is subject to a maximum amount. The maximum weekly payments have increased from 6th April 2021 and you should be aware when calculating statutory redundancy payments this maximum amount is now £544.


Statutory family related pay and sick pay

The weekly rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay has increased to £151.97 from 4 April 2021.

The weekly rate of statutory sick pay has increased to £96.35 from 6 April 2021.

Ensure any employees who are currently on any of these types of leave are now being paid the new statutory minimums and ensure all policies and documents that mention the rates are also reviewed and updated if necessary.


Gender Pay Gap reporting

Employers with more than 250 employees are required to publish their gender pay gap report which would have normally be expected to have been completed by 4th April however, due to the pandemic the Equality and Human Rights Commission (EHRC) has stated that due to the coronavirus pandemic, enforcements of the gender pay gap reporting duty for 2020/2021 is delayed by 6 months and does not begin until 5 October 2021 and applies to all employers.

Whilst you are still required to report your figures and where possible do report as close to the April deadline if it has not already been completed, there is an extra six months in which to do so before enforcement action begins.


Coronavirus Job Retention Scheme            

For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods starting on or after 1 May 2021.

For periods ending on or before 30 June 2021 you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. From 1 July 2021, the level of grant will be reduced each month and you will be asked to contribute towards the cost of your furloughed employees’ wages.

Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

You will need to pay for employer National Insurance contributions and pension costs.


EU Settlement Scheme

Finally, just a reminder that eligible employees need to apply for pre-settled or settled status under the EU settlement scheme by 30th June 2021. Further information on applying to the EU settlement scheme (settled and pre-settled status) can be found on the Government website

Pre-settled or settled status is evidence that the individual resided in the UK prior to the end of the Brexit transition period and has a right to live in the UK. A European national with settled status may also be eligible to apply for British citizenship.


Note: The above guidance was correct at the time of writing this article on 12/04/21 however, you need to be fluid in your approach to coronavirus as the policy and government guidance is changing rapidly. We therefore recommend you regularly check the government official guidance on the website and news for updates or contact us if you have any specific questions.
If you have any questions regarding the content of this newsletter, or would like more information to support your business with the changes, please get in touch.


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