Coronavirus Job Retention Scheme
Originally slated to close on 30 April 2021, the Spring Budget on 3 March confirmed a further extension of furlough until 30 September 2021. The UK Government will continue to pay 80% of employees' wages for unworked hours until the end of June, with the employer picking up the costs of NICs and employer pension contributions. In July, the employer will be required to contribute 10% to wages for unworked hours and in August and September that contribution increases to 20%. The employer remains responsible for the full costs of wages for worked hours.
National Living Wage/National Minimum Wage
1 April will see a drop in the age at which employees become entitled to the National Living Wage from 25 to 23 years as well as the usual increase in rates. In addition, the period that an employer must retain records sufficient to prove it is paying a worker the correct rate will extend from three to six years with effect from 1 April 2021.
The new rates will be:-
- NLW will increase from £8.72 per hour to £8.91 per hour (for those aged 23 and over)
- NMW 21 to 22 year old rate will increase to £8.36 per hour
- NMW 18 to 20 year old rate will increase to £6.56 per hour
- NMW 16 to 17 year old rate will increase to £4.62 per hour
- NMW apprentice rate for those aged under 19 or in their first year of an apprenticeship will increase to £4.30 per hour
Statutory sick pay increases from £95.85 to £96.35 per week. Statutory maternity, paternity, shared parental and adoption pay increases from £151.20 to £151.97 per week. These increases usually occur on the first Sunday of April.
The annual Employment Tribunal award limit changes will take effect on 6 April 2021. For cases involving dismissals, the figures apply where the effective date of termination falls on or after 6 April 2021. The limit on compensatory award for unfair dismissal will rise from £88,519 to £89,493.
The cap on the compensatory award is the lower of the compensatory award limit (£89,493 from 6 April) or 52 weeks' pay (based on the Claimant's gross salary prior to dismissal including employer pension contribution but excluding benefits in kind and discretionary bonus). There are a limited number of exceptions where the cap does not apply. These are dismissals for whistleblowing or for raising certain health and safety issues. In addition, there is no limit to the award that can be made where a dismissal is related to unlawful discrimination.
The limit on a week's pay (used for calculating statutory redundancy payments and the basic award for unfair dismissal) will increase from £538 to £544 meaning the maximum basic award and maximum statutory redundancy payment increases to £16,320.
Guidelines for Injury to Feelings Awards
An award for injury to feelings is made to compensate for injury to feelings caused by discrimination. The award is separate from an award to compensate for financial loss and can be made even where no financial loss has been suffered. To assist Employment Tribunals, the Court of Appeal previously set out guidance for quantifying awards for injury to feelings, known as the Vento bands. The new Vento bands are as follows for any cases presented on or after 6 April 2021:-
Lower band (less serious) £900 - £9,100
Middle band £9,100 - £27,400
Upper band (more serious cases) £27,400 - £45,600
Awards over £45,600 will be made only in exceptional cases.
Gender Pay Gap Reporting
Gender pay gap reporting was suspended in 2020 and it has recently been announced that enforcement of the reporting requirement will be suspended again this year for a period of 6 months.
Employers are still encouraged to meet the 30 March (public sector) and 4 April (larger private and voluntary organisations) deadlines if possible. However, the Equality and Human Rights Commission have confirmed no enforcement action will be taken until 5 October 2021. As such, affected employers have until that date to comply.
Depending on whether you use the figures based on the 50% of employers who did report in April 2020 or the ONS statistics (which are based on more recent data and a broader selection of businesses) the gender pay gap either increased by nearly 1% last year or decreased by 1.6%.
In terms of what we will see this year, the overall situation will be impacted by COVID-19 given the timing of the snap shot date and the fact that the furlough scheme ran from 1 March 2020.
It has been widely reported that the pandemic has had an inequitable impact on women in the workplace, with more women than men being furloughed. However, the Gender Pay Gap Information Regulations require employers to omit from their pay-gap calculations any employees who were on a reduced rate of pay on the snapshot date. This would include furlough pay and could constitute a significant proportion of an employer's workforce which may well skew the figures somewhat.
The Equality and Human Rights Commission has published guidance on gender pay gap reporting in the context of COVID-19.
Changes to IR35 in the private sector - also delayed by 12 months as a consequence of Covid-19 - will come into force on 6 April 2021. The rules shift responsibility for determining the status of a contractor for tax purposes onto the client.
Post-Employment Notice Pay
Changes to the calculation of Post-Employment Notice Pay will also take effect from 6 April 2021. The existing formula had the unintended consequence of having more or less favourable outcomes depending on when in the year employment terminated. The change will result in a more consistent calculation. A further change will mean the tax treatment of PENP for employees who are not resident in the UK will be aligned with the treatment of all UK residents. However, this applies only to employees who physically perform their duties in the UK.