Budget 2021: What employers need to know

The Chancellor of the Exchequer, Rishi Sunak, unveiled this year’s budget on March 3, 2021. Harrison Drury’s employment team outlines the key information and action points for employers.

Coronavirus Job Retention Scheme extended

The Coronavirus Job Retention Scheme (CJRS) or furlough scheme, has been extended until September 30, 2021. Furloughed employees will continue to receive 80 percent of their salary for hours not worked, subject to the cap.

But note, employers will be expected to contribute 10 per cent from July 1, increased to 20 per cent from August 1, 2021, towards each furloughed employee’s pay.

For further information regarding features of the extended furlough scheme please see our previous post: Furlough Extension: Everything you need to know

Protect your business from fraudulent CRJS claims and investigation

The Chancellor also announced a taskforce specifically to tackle fraudulent CRJS claims. It is now more important than ever that employers ensure all is in order with their procedures and claims.

When adding an employee to CRJS, some key points to note are:

• Have the various eligibility factors been met?
• Are your records in order if required as evidence?
• Has the money claimed been calculated correctly accounting for discretionary and non- discretionary payments?

Further guidance to help reduce the risk of a fraudulent claim can be found in our two previous posts:

• Job Support Scheme payments – Reducing the risk of fraudulent claims
• Coronavirus Job Retention Scheme: Warnings against fraudulent claims

Self-employed support extended

Rishi Sunak also confirmed that support for the self-employed will be extended to September 30, 2021.

Providing the relevant criteria has been met, self-employed persons may be eligible for a grant representing 80 per cent of average monthly profit.

The criteria includes:

• You must have annual trading profits of less than £50,000.
• More than half of your total income must come from self-employment.
• You must have traded during the 2019/2020 tax year and 2020/2021, and intend to continue to trade.
• You must have filed a tax return for 2019/20.
• Your business must have been impacted by coronavirus, which you believe will cause a significant reduction in trading profits.

National Living Wage increase

Several changes to the National Living Wage were also announced. It has been increased to a minimum of £8.91 an hour and will now include workers aged 23 and over.

The national minimum wage has also been increased for younger people, to £8.36 for those aged 21-22 and £6.56 for 18-20 year olds.

Double incentive for apprentice hires

Additional support is being provided for apprenticeships, in an effort to ensure workers have the opportunity to develop relevant and specialist skills. The incentive to hire apprentices has been doubled to £3,000 per new apprentice hire between April 1, 2021 and September 30, 2021.

With this increase in the incentive, businesses may now take on additional apprentices or be considering taking on an apprentice for the first time. It is important to note that apprenticeships and the law protecting them is complex and can be particularly challenging to navigate given the various rights they are afforded and the criteria that must be met.

Businesses should ensure that appropriate apprenticeship agreements are drawn up to accurately reflect the employment relationship, and to avoid the risk of inadvertently providing the apprentice with enhanced rights, which include eligibility for damages on early termination.

Planning for the future

Despite an extension to the financial support offered during the pandemic, it is expected to end on September 30, 2021.

As organisations begin to consider how their business will look after the end of the support, it’s important to be proactive and focused in looking to the future.

The increase in the national minimum wage, may also have a significant impact on some businesses, especially those hit hardest by the pandemic.

While some redundancies may be unavoidable, for others there may be ways to restructure the business and mitigate redundancies by making cost savings elsewhere. It is imperative to take advice with regards to making any contractual changes or carrying out a redundancy process.

Further information can be found in our previous post: Planning for the future – Getting restructuring and redundancy right

If you would like assistance to consider the options available to your business in terms of restructuring and re-organisation, Harrison Drury’s employment team can provide comprehensive advice and guidance, including in relation to redundancy procedures.

Our employment team can also assist you in implementing the extended CJRS by drafting formal working arrangements for your workforce. To discuss any matters relating to this article, please contact our employment team on 01772 258321.