Despite all of the above, a number of changes have been made to UK employment legislation this year. What follows are the four main changes that employers must be aware of to guarantee compliance.
Statutory rate increases
April 2021 saw a range of statutory rate increases, including:
- national living wage and national minimum wage
- maternity, adoption, paternity, and shared parental pay
- sick pay
- apprentice pay rate
From 1st April 2021, the national living wage, for employees aged 23 years or older, rose to £8.91 per hour. The national minimum wage hourly rate rose to:
- £8.36 for 21 to 22 year olds
- £6.56 for 18 to 20 year olds
- £4.62 for workers above compulsory school leaving age but under 18 years old
- £4.30 for apprentices under 19 years old and first year apprentices aged over 19 years
For information on all current statutory rates, visit Rates and Thresholds for Employers 2021 to 2022.
IR35 extended to private sector
The off payroll working rules (IR35) affect employers who use the services of contractors operating through their own limited company or other intermediary. IR35 ensures that contractors who carry out similar roles to employees don’t pay less tax and make lower national insurance contributions than they would if they were employed by the client company. Where IR35 applies, the responsibility for processing tax and national insurance falls on the employer, not the contractor.
Since April 2017, public companies using the services of contractors working through their own limited company, also known as a personal service company (PSC), or other intermediary bore the responsibility of deciding whether IR35 rules were applicable to their arrangement.
In April 2021, this responsibility was extended to include private sector organisations that have more than 50 employees, an annual turnover of more than £10.2 million, and a balance sheet value of over £5.1 million. This extension also applies to the voluntary sector.
Changes to immigration law
On 1st January 2021, free movement between the UK and EU ended and a new points-based immigration system was introduced. While this isn’t a change to employment legislation, it will affect the way that employers operate the handling of non-UK workers.
The new immigration system will affect employers in three main ways: first, the way they support European employees who were resident in the UK prior to the end of 2020, second, the sourcing of non-UK workers, and third, the processing of right to work checks.
It is imperative that employers become familiar with the new immigration system and how it affects their current workforce and future recruitment plans.
Health and safety protection extended to workers
The Employment Rights Act 1996 (Protection from Detriment in Health and Safety Cases) protects employees from detriment, that is, suspension of pay or disciplinary action, and dismissal in health and safety cases where the employee took action to protect themselves or others. Such action might be a refusal to return to what the employee deems to be an unsafe workplace or ceasing a work process that they believe may cause them harm.
From 31st May 2021, this protection was extended to include workers. In this context, the category of worker includes employees but is broader, covering individuals who work under a contract but perhaps only on an occasional or short-term basis. It does not include the self-employed.
Wrapping it up
All of the changes mentioned in this article will demand the attention of employers to guarantee compliance:
- increasing statutory rates
- checking contracts for IR35 relevancy
- supporting and recruiting non-UK employees
- carrying out appropriate right to work checks
- providing health and safety protection to all workers, not just employees