The long awaited, and previously postponed, IR35 reforms came into force on 6 April 2021. These will affect any medium or large sized private organisation that engages with contractors. Under the new rules, where the contractor is providing their services through an ‘Intermediary’ (such as a personal service company), the end client will have the responsibility for determining whether the contractor falls ‘inside’ IR35 and, if so, either it or any agency that pays the consultant’s fees will be responsible for making PAYE and NICs deductions and payments.
Failing to comply with obligations under the new rules is likely to lead to substantial liability. Although the new rules only apply where the contractor is providing their services through an ‘Intermediary’, it is likely that HMRC will look more closely at all ‘off-payroll’ workers, including sole traders.
What to do now? Organisations are advised to audit their workforces now and make plans as to how status assessments will be made. It is also important to ensure there is training amongst staff to understand the new duties and risks. For help and support on these new rules, please speak to us.
Health and Safety – Protection from detriment extended to Workers
From 31 May 2021, an amendment to section 44 of the Employment Rights Act 1996 will come into force, extending the protection against detriment for taking certain action or steps in respect of health and safety concerns, to workers. This protection is currently only enjoyed by employees.
We have already seen a number of tribunal claims brought by employees relying on this section in the context of the Covid-19 pandemic, specifically in relation to a refusal to attend the workplace. This extension potentially opens the door for further claims of a similar nature, and employers should bear this in mind when taking action against any workers who refuse to attend the workplace as a result of concerns regarding Covid-19.
Changes to the formula for post-employment notice pay (PENP)
A change to the way that post-employment notice pay is calculated came into force on 6 April 2021. The changes give an alternative PENP calculation where an employee’s pay period is defined in months, but their contractual notice period or PENP is expressed in weeks. This will impact any employers who are calculating termination payments made under settlement agreements, who should ensure that PENP is calculated correctly in order to avoid any unintended tax liability.
Increase to Tribunal Compensation Limits and Statutory Redundancy Payments
With effect from 6 April 2021, the following new limits will apply:
- The maximum amount of a week's pay (used for calculating a statutory redundancy payment or for various awards including the unfair dismissal basic award) £544 (was £538);
- The maximum basic award/ statutory redundancy payment increasing to £16,320 (was £16,140).
These new rates apply to terminations or redundancies on or after 6 April 2021.
Increases in National Living/Minimum Wage
With effect from 1 April 2021, the National and Living minimum wage rates increased. Also, note that the National Living Wage will now apply to those aged 23 and over (a change from 25 years old):
- Workers aged 23 and over: £8.91 (National Living Wage)
- Workers aged 21-22: £8.36
- Workers aged 18-20: £6.56
- Workers aged 16-17: £4.62
- Apprentices: £4.30
Statutory sick pay (SSP) and other family-related leave
From 4 April 2021, the weekly rates of statutory maternity pay, statutory paternity pay, statutory adoption pay, statutory shared parental pay and statutory parental bereavement pay increased from £151.20 to £151.97.
From 6 April 2021, the weekly rate of statutory sick pay increased from £95.85 to £96.35.
With any changes to statutory payments, do check with your payroll department that these rates are being applied from their applicable dates.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.