Budget 2021: Changes to Employment Law

Year Published: 2021
Following Chancellor Rishi Sunak’s Budget announcement, we outline the key points with regards to the changes to employment law. These include the furlough leave extension, hiring apprentices, Statutory Sick Pay and the National Living Wage.

Furlough Leave Extension

The current furlough scheme will now continue for a further five months until 30th September 2021 (instead of the original deadline of 30th April 2021), and employees will continue to receive 80% of their current salary for hours not worked. However, the furlough scheme will change slightly with employers contributing 10% towards hours that their staff do not work in July, rising to 20% in August and September.

This will not come as a surprise given the Government’s 4-step plan out of restrictions envisages a full reopening of the economy no earlier than 21st June 2021. Even if a full re-opening happened in June or July, employers will continue to need support and this extension is a partial recognition of that with a sliding scale of support as the economy re-opens.

We also expect that this will not be the last extension of the furlough scheme.

Hiring New Apprentices

The Government will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1st April 2021 and 30th September 2021 will receive £3,000 per new hire. This is in addition to the existing £1,000 that the government provides for all new 16-18 year old apprentices and those aged under 25 with a Care Plan.

Statutory Sick Pay

Small and medium-sized employers will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay costs per employee. The Government has said that it will set out an end date for this scheme in due course. This rebate scheme is for employees who are sick due to COVID-19. Employers must have a payroll scheme in place and less than 250 employees as of 28th February 2020 to use the scheme.

National Living Wage

From April 2021, the National Living Wage will extend to workers aged 23 and 24 years old, instead of just those who are aged 25 and over. The National Living Wage will increase by 2.2% to £8.91. This announcement was made in November 2020, however, the Chancellor reiterated that this is something the Government would be continuing with, especially with inflation set to rise which will put pressures on the cost of living.

This Budget, from an employment law perspective, was about giving confidence to employers that existing support mechanisms will continue. With an unpredictable few months ahead, the availability of such support will be very much welcomed by employers.

For further information on any of the changes made to Employment Law or for any other related Employment Law matter, please contact Warren Moores on 0161 475 1225 or email [email protected].

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