Your Guide to the 2021 Increases to Statutory Rates of Pay

The arrival of April brings with it new statutory increases that are crucial to get in place to ensure that payments to your employees and workers are accurate and compliant.

The following rates are now applicable in Northern Ireland as of April 2021:

1. National Living Wage

We know that all minimum wage rates increase each year on 1^st April, but an important note for this year relates to the National Living Wage.

The NLW will now be applicable to those 23 years old and over, as opposed to previously being applied to those 25 years old and over.

Ensure that you and your payroll processes are extending the review to those who are newly eligible and keep records on your compliance checks.

2. National Minimum Wage

Note that from April 2021 employers must now retain records to show compliance with National Minimum Wage for 6 years, an increase from 3 years.

3. Accommodation Offset

Often most applicable to hospitality organisations who provide accommodation to staff. Provision or payment of the accommodation has implications for the minimum wage.

4. Family Friendly Policy Statutory Increase

These rates will be applicable to employees availing of the family friendly provisions named above. Or alternativity the rate will be based on 90% of the employee’s average weekly earnings, whichever of the two is lower.

5. Statutory Sick Pay

It is important to remember that the temporary removal of the three-day waiting period is still in place for statutory sick pay. This continues to be applicable to those needing to self-isolate due to Covid-19.

6. Redundancy Payment

Crucial to note for any employers in the position of calculating redundancy payments; the maximum amount of one week’s pay for calculations has now increased to £566. This will have significant impacts to the costs associated with redundancy for employers and will be a welcome increase for those impacted.

7. Unfair Dismissal

The increased £566 weeks pay rate is also applicable to calculations of award of compensation for unfair dismissal. Also, certainly worth note is the increase on compensatory award for unfair dismissal:

Reinforcing the need to ensure that any necessary dismissal procedures are based on a robust process. If in doubt, ensure you seek professional advice on grounds for dismissal.

Upcoming Webinar:

Minimum Wage and Statutory Rates of Pay 2021

Wednesday 28th April, 11am – 12pm

In December 2020, 139 companies, ranging from giants such as Tesco, Pizza Hut to small local companies, were ‘named and shamed’ by HMRC for failure to comply with national minimum wage rates. Rather than a simple failure to increase rates, employers can be easily caught out by common pitfalls. Including: where deductions have been made from pay, using the wrong calculation period, or failing to pay for travel time.

Co-hosted by our Senior HR Consultant, Jenni Barkley, and Rachel Penny from Carson McDowell solicitor’s employment law team, this webinar will take you through the practical and legal implications of the rate changes and common pitfalls you should be aware of.

Click here to read more and register.

Note that these rates are applicable to Northern Ireland, for employees working outside of Northern Ireland feel free to reach out to one of our HR Consultants or visit The National Minimum Wage in 2021 – GOV.UK (www.gov.uk).