Embrace HR Statutory Pay rate rises

While many things in our world are unusual at present, one thing that never changes is the rate rises that come into effect each April. Read on to ensure you have the correct figures available when paying your April wages and salaries…

Wage and Statutory Pay Increases April 2021

As many of us watching the Spring Budget on 3 March concentrated on whether Chancellor Rishi Sunak would hit us with taxes to pay for the Covid support offered to workers, businesses and the self-employed over the past year, it might have been easy to miss the announcement of the annual rate rises for minimum wage and other statutory payments.

Essential for anyone dealing with payrolls and other human resource issues within the care sector, these need to be applied from various dates in April. The four rate rises are explained below.

First though, a brief explanation on the difference between the National Living Wage (NLW) and the National Minimum Wage: the National Minimum Wage (NMW) is the minimum rate of pay per hour which almost all workers are entitled to; whereas the National Living Wage (NLW) is slightly higher and applies to workers if they’re over the age of 23.

National Living Wage (NLW)

One point to make note of is that the age threshold has been reduced for the National Living Wage, so it now applies to those aged 23 and over, while the main adult rate is for those aged 22 and 23.

  • The National Living Wage rises to £8.91 on April 1 (a rise of 2.2% from £8.72).
  • For workers aged 21 and 22 the new rate is £8.36.
  • For those aged 18 to 20 the new rate is £6.56.
  • Under-18s can look forward to a new hourly rate of £4.62, while apprentices will receive £4.30.
Age 2020 rate 2021 rate Percentage increase
20-21 £8.20 £8.36 2%
18-20 £6.45 £6.56 1.7%
16-17 £4.55 £4.62 1.5%
Apprentice £4.15 £4.30 3.6%

Statutory Redundancy Pay Cap

A weekly pay cap is applied to Statutory Redundancy Pay, and any changes come into effect on 6 April 2021.

The cap is calculated in line with any changes that have occurred to the RPI (Retail Prices Index). So, if the RPI in the preceding September is higher, then the statutory weekly redundancy amount is increased by the same percentage.

At present the cap is set at £538, with the new maximum predicted to be £544.

Statutory Maternity Pay (SMP)

The flat SMP rate changes on the first Sunday in April. This year, the rate should rise to £151.97 (from £151.20) on 4 April 2021.

This rate is also the same for Statutory Adoption, Shared Parental and Paternity Pay.

Your employees should be paid 90% of their average weekly earnings for the first six weeks of their maternity leave. For the next 33 weeks, they should receive whichever is the lower – SMP or 90% of their average weekly earnings.

Statutory Sick Pay (SSP)

The rate for SSP will change on 6 April 2021 and should rise to £96.35 (from £95.85).

Employees are entitled to SSP if they are off sick for four or more days in a row and can claim SSP for up to 28 weeks.

If you would like to discuss this subject further, please contact Cecily Lalloo at Embrace HR Limited.

T: 01296 761288 or contact us here.

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Based in Aylesbury, Buckinghamshire, Embrace HR Limited provide a specialised HR service to the care sector, from recruitment through to exit.