On 02 March 2021, the Department for Business, Energy and Industrial Strategy (BEIS) laid The Employment Rights (Increase of Limits) Order 2021 that applies in Great Britain. Section 34 of the Employment Relations Act 1999 provides for changes to employment law payments and awards in Great Britain under two Acts:
• The Trade Union and Labour Relations (Consolidation) Act 1992 (1992 Act) and
• The Employment Rights Act 1996 (1996 Act)
The headline notes of this legislation, effective 06 April 2021, were:
• The daily amount of guarantee payment remains at £30
• The value of ‘a week’s pay’ increases from £538 to £544 per week
• The maximum compensatory award in unfair dismissal claims increases from £88,519 to £89,493- or one-year’s net salary, whichever is the lower. This unfair dismissal cap has been in place since 29 July 2013
These are shown below in red compared to the values that applied from 06 April 2020.
It is vital that we know the UK-wide picture and were waiting patiently for Northern Ireland to come up with similar legislation.
The Legislation in Northern Ireland
On 23 March 2021, The Employment Rights (Increase of Limits) Order (Northern Ireland) 2021 was published by the Department for the Economy. This was debated by the Committee for the Economy on Tuesday 23 March 2021 (fast forward to the 55th minute 20th second of the debate!).
As we are just over a week or so away from the start of the tax year in which they are to be effective, I wanted to get this information out to professionals as soon as possible.
Reason for the Legislation
Under provisions in Article 33 of the Employment Relations (Northern Ireland) Order 1999, if the Retail Prices Index (RPI) for September of a year is higher (or lower) than the index for the previous September, the Department for the Economy is required to pass legislation in the form of an Order. The RPI increase in the period September 2019 to September 2020 was 1.1%. The effect of this is to change the limits that apply to certain awards made by Industrial Tribunals, the Fair Employment Tribunal or as a result of arbitration by the Labour Relations Agency. These are awarded under either:
- The Trade Union and Labour Relations (Northern Ireland) Order 1995 (1995 Order), or
- The Employment Rights (Northern Ireland) Order 1996 (1996 Order)
The New Values
The headline notes of this legislation, effective 06 April 2021, are:
- The daily amount of guarantee payment remains at £30. This is aligned to the value in Great Britain
- The value of ‘a week’s pay’ increases from £560 to £566 per week. This is not aligned to the value of Great Britain
- The maximum compensatory award in unfair dismissal claims increases from £88,693 to £89,669. This is not the same as the value in Great Britain and there is no provision in Northern Ireland for this to be the value of one year’s net salary if this is lower
The following are the revised increases that apply where the event giving rise to the compensation entitlement occurs on or after 06 April 2021 (shown in the ‘Schedule’ of The Employment Rights (Increase of Limits) Order (Northern Ireland) 2021 above). These are shown below in red compared to the values that applied from 06 April 2020.
Ian Holloway is a highly respected payroll practitioner, writer, advisor and trainer. He has worked in the payroll profession for over 30 years and is now Payroll Consultant at i-Realise, an independent change management business operating in the HR & payroll space.
Ian has hands-on experience processing payrolls from all sectors, large and small. In 2011 he shifted focus to his passion for educating the profession and also worked on improving payroll software solutions to meet legislative requirements and business goals. He is the Trailblazer Chair for the Level 3 Payroll Administrator Apprenticeship and the Level 5 Payroll Assistant Manager Apprenticeship. He also advises on the practical impacts of new government legislation.
As Payroll Consultant at i-Realise, Ian’s broad experience and up-to-date knowledge allows him to publish insights to UK HR & Payroll professionals through workshops, white papers, newsletters and face-to-face presentations. Ian regularly speaks at industry conferences and is a featured writer for several Payroll, HR and Finance publications. Ian leads i-Realise’s monthly payroll forum, a confidential platform for in-house payroll leaders and managers to discuss new legislation and collectively improve best practice.
You can contact Ian at email@example.com