Employment law changes in April 2021

United KingdomScotland

April each year sees changes in statutory rates and compensation limits and is normally a key date in the employment law calendar. This April the major change is the ‘off payroll’ rules affecting those working in the private sector, often referred to as IR35 which came into effect on 6 April 2021. These changes will apply to medium and large companies in the private sector in relation to individuals providing services through an intermediary (usually, but not necessarily, a personal service company). For more detail on the reforms please refer to our earlier update here and our webinar Preparing for IR35.

National Living Wage

From 1 April the national living wage increased from £8.72 to £8.91 and is extended to 23 and 24 year olds for the first time. The national minimum wage increase is as follows:

  • 21 to 22 year old rate from £8.20 to £8.36 per hour;
  • 18 to 20 year old rate from £6.45 to £6.56 per hour;
  • 16 to 17 year old rate from £4.55 to £4.62 per hour; and
  • apprentice rate from £4.15 to £4.30 per hour.

Statutory rates

Statutory maternity/paternity/adoption/shared parental pay increased from £151.20 to £151.97 per week from 4 April. Statutory parental bereavement pay will also be paid at £151.97.

Annual increases to the following statutory payments/limits that took place from 6 April 2021 include:

  • an increase in statutory sick pay from £95.85 to £96.35 per week;
  • an increase in a week’s pay from £538 to £544 (for the purposes of calculating a basic award or a statutory redundancy payment); and
  • the maximum compensatory award for unfair dismissal increased from £88,519 to £89,493 (but subject to a lower cap of 52 weeks’ gross pay if this is less).

Enforcement of gender pay gap reporting is delayed

The enforcement of gender pay gap regulations has been suspended for six months until 5 October 2021. Normally the deadline for reporting is 4 April each year. However, this year employers are being given an additional 6 months to report in view of the ongoing challenges of the pandemic. The EHRC is encouraging employers to report by the usual deadline of 4 April 2021 wherever possible.

Change to calculation of PENP

New rules came into force on 6 April 2021 which mean that employers must calculate Post Employment Notice Pay (PENP) in a certain way where an employee’s pay period is defined in months, but their contractual notice period or post-employment notice period is not a whole number of months. Further details explaining this change and the way in which to calculate PENP will be contained in a separate Law-Now.

Vento Bands

The bands and awards for injury to feelings in a discrimination claim, known as the ‘Vento Bands’ were revised on 6 April 2021. For claims brought on or after 6 April, the Vento bands are now:

  • Lower band - £900 to £9,100 (less serious cases);
  • Middle Band - £9,100 to £27,400 (cases that so not merit an award in the upper band);
  • Upper Band - £27,400 to £45,600 (the most serious cases);
  • The most exceptional cases will be capable of exceeding £45,600.