Key changes taking place over the next two months

1. IR35 reforms

The long awaited, and previously postponed, IR35 reforms come 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. 

CALL TO ACTION - 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.  

2. 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.  
The extension of this protection to workers will open 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.

3. Changes to the formula for post-employment notice pay (PENP).

A change to the way that post-employment notice pay is calculated will come into force from 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. 

4. Changes to UK immigration rules 

Changes to the Sponsored Skilled Workers route are due to take effect from 6 April 2021.  This route is available for applicants who have a confirmed job offer from an approved employer sponsor.
The changes introduce a new minimum hourly rate of pay of £10.10. Employer sponsors must calculate the hourly rate of pay for their sponsored employees, even if the annual minimum salary requirement of £25,800 is met.

CALL TO ACTION – for help and support with your organisation’s business immigration needs please contact Chris Harber, Head of Immigration 

5. COVID-19: Coronavirus Job Retention Scheme (CRJS)

The CRJS was due to end on 30 April 2021. However, it has now been extended to the end of September 2021.
The existing scheme will continue until 30 June 2021. However, from 1 July 2021, the level of grant will be reduced. Employers must pay 10% towards the cost of hours not worked, and this will rise to 20% for August and September 2021.

6. COVID-19: Changes to guidance for clinically extremely vulnerable workers

From 1 April 2021, individuals who are clinically extremely vulnerable will no longer be required to shield, and as a result, they will no longer be eligible for statutory sick pay or Employment and Support Allowance on the basis of being advised to shield.

Those employing clinically extremely vulnerable individuals should continue to allow them to work from home, where this is possible.  If working from home is not possible, employers should take steps to reduce the risk of transmission in the workplace, or alternatively consider whether those individuals might be eligible for furlough.   

7. 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 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).

CALL TO ACTION - These new rates apply to terminations or redundancies on or after 6 April 2021.

8. Increases in National Minimum Wage, statutory sick pay and pay for family-related leave

With effect from 1 April 2021, the National and Living minimum wage rates will be increased, and the National Living Wage will now apply to those aged 23 and over:

• 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

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 increase from £151.20 to £151.97.
From 6 April 2021, the weekly rate of statutory sick pay will increase from £95.85 to £96.35.