Two upcoming changes taking place at the beginning of April 2021, are a change to the statutory cap and changes to the scope of the national living wage
Statutory Cap
The statutory cap on a weeks pay for the purposes of calculating the basic award and statutory redundancy pay, rises from £538.00 to £544.00 with effect from the 6th April 2021. Hence, the unfair dismissal basic award in employment tribunal cases will increase, and the maximum is now £16,320.00 (i.e. 20 x £544.00 x 1.5).
The maximum amount that can be awarded for the unfair dismissal compensatory award will increase from £88,519.00 to £89,493.00 on the 6th April 2021.
Statutory Redundancy Pay
The statutory cap on a weeks pay also increases from £538.00 to £544.00 on the 6th April 2021 for the purposes of calculating statutory redundancy pay, and the maximum is now £16,320.00 (i.e. 20 x £544.00 x 1.5). Hence, from the 6th April 2021, the amount of statutory redundancy pay an employee is entitled to is the number of weeks which can be taken into account multiplied by the lower of either their average weekly wage or £544.00.
The number of weeks which can be taken into consideration depends on how long the employee has been continuously employed by their employer and how their years of continuous service relate to certain age bands. For each complete year of continuous service between the ages of 18 and 21, they will receive half a week's pay. For each complete year of continuous service between the ages of 22 and 40, they will receive one week's pay. For each complete year of continuous service between the ages of 41 and 65, they will receive 1½ weeks' pay. The maximum number of years which can be taken into account is 20.
National Living Wage
With effect from the 1st April 2021, the scope for the national living wage is being extended from all those aged 25 and over, to all those aged 23 and over. Hence, those aged 23-24 currently being paid the national minimum wage of £8.20 per hour, will have to be paid at least the national living wage of £8.91 per hour from the 1st April 2021, an increase of 8.7%.
Other Changes
Other changes include the following (which all apply from the 6th April 2021, and increase as a direct result of an increase in the statutory cap on a weeks pay from £538.00 to £544.00):-
- Failure to comply with a tribunal order to reinstate or re-engage the employee (26-52 weeks pay maximum capped at £544.00 per week): increases from £13,988.00 - £27,976.00 to £14,144.00 - £28,288.00
- Minimum basic award for dismissal on trade union, health & safety, occupational pension scheme trustee, employee representative, and working time grounds: increases from £6,562.00 to £6,634.00
- Right to be accompanied not properly adhered to (up to 2 weeks pay capped at £544.00 per week): maximum increases from £1,076.00 to £1,088.00
- Failure to provide written statement of particulars (between 2-4 weeks pay capped at £544.00 per week): increases from £1,076.00 - £2,152.00 to £1,088.00 - £2,176.00.
- Failure to comply with the flexible working regulations (up to 8 weeks pay capped at £544.00 per week): maximum increases from £4,304.00 to £4,352.00
Reaction
Whilst an increase in the statutory cap was anticipated, the widening of the scope of the national living wage was an unexpected surprise. The Chancellor of the Exchequer, Rishi Sunak, stated at the time of the announcement in the Spending Review on the 25th November 2020, that: “Taken together, these minimum wage increases will likely benefit around two million people. A full-time worker on the national living wage will see their annual earnings increase by £345.00 next year. Compared to 2016, when the [national living wage] was first introduced, that’s a pay rise of over £4,000.00”
Laura Gardiner, the Director of the Living Wage Foundation, added: "Despite being smaller than we’ve become accustomed to, a 19p increase in the ‘National Living Wage’ should keep Britain on track to hit the target of a minimum wage worth two-thirds of typical pay by the mid-2020s. But it means that the gap between the legal minimum and the real Living Wage of £9.50 per hour is set to grow, with the difference worth almost £1,200 per year for a full-time employee. Sticking to the plan of extending the National Living Wage to 23-year-olds is a welcome step that will see a big pay boost for many younger workers who have borne the brunt of this economic crisis."
