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Five key changes to Employment Law in 2021

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After a difficult and turbulent year many employers are no doubt hoping for a smoother 2021. However, the coming 12 months will have their own challenges and employers should be prepared. Our Employment Law team here outline some of the main changes in employment law you should anticipate in 2021 and how to prepare for those.

Changes to the Coronavirus Job Retention Scheme

The Government has indicated it will continue to review and adjust the level of economic support it provides to employers.  The current Coronavirus Job Retention Scheme (CJRS), which allows you to claim 80% of a furloughed employee’s wages from the Government, will be reviewed in January and you may be required to contribute a proportion of furloughed employees’ wages as early as 31 January.  You should also review and plan how your business will manage increased costs when the CJRS concludes at the end of April 2021.

If your business has received a CJRS grant, you should keep in mind that you may be audited by HMRC. To protect your business from allegations of “furlough fraud” you should keep careful records of any Government support you receive and check that you only received money you were entitled to.

Increase to the National Minimum Wage and statutory leave payments

The Government has announced changes to the National Minimum Wage, statutory sick pay, and statutory family leave entitlements which will take effect in the spring of 2021.

Effective 1 April, the age at at which the National Living Wage applies will be lowered from 25 to 23, and the following minimum wage rates will apply:

  • Age 23 or over (NLW rate): £8.91
  • Age 21 to 22: £8.36
  • Age 18 to 20: £6.56
  • Age 16 to 17: £4.62
  • Apprentice rate: £4.30

Changes to statutory sick pay and statutory family leave pay are expected to take effect on 4 April. The weekly rate for statutory sick pay is expected to increase to £96.35 and the rates for statutory maternity, paternity, adoption, shared parental, and parental bereavement pay is expected to increase to £151.97.

New immigration rules

In January 2021, the Brexit transition period will end and new immigration rules will take effect.  EEA nationals and non-EEA nationals will both be subject to a new points-based immigration regime. The new regime will make it more difficult for you to hire EEA nationals as many will now require a visa to lawfully live and work in the UK.  Many work visas require the individual to be sponsored by their employer, so businesses who usually hire people from EEA countries should seriously consider applying for a sponsorship licence.  You should also encourage any current employees who are EEA nationals to apply for settled or pre-settled status.

IR35

The new rules regarding off-payroll working (IR35) had been postponed for a year due to the coronavirus pandemic and are now scheduled to take effect on 6 April 2021.  Under the new rules, medium and large private-sector businesses must carry out a status assessment of all contractors they engage through an intermediary.  Factors relevant to the assessment include:

  • the work done by the contractor,
  • how long they have worked at the business, and
  • their integration within the organisation.

If the assessment determines that the relationship between the business and the contractor is similar to an employment relationship, the individual contractor will be a “deemed employee” for tax purposes. The business will then be responsible for deducting income tax and national insurance contributions for the individual.

Failing to take reasonable care in your assessments may result in the business being liable to pay any tax or NI contributions due for the relevant period as well as any penalties.  The Government has developed an online tool, Check Employment Status Tool (CEST) to help employers make assessments.  HMRC has indicated they will accept a CEST assessment as long as the information inputted by the business was accurate.

You should ensure that HR personnel and managers understand the changes introduced by IR35 and how they affect your business. You may also formulate a policy and process for making IR35 assessments and begin the assessment process for any contracts you currently have.

Redundancy protection

The Government has indicated that it intends to strengthen redundancy protections for employees on maternity leave and new parents.  Under the current law, employees at risk of redundancy who are pregnant or on maternity leave have the right to be offered any suitable alternative employment.  This right applies from the beginning of pregnancy to when the employee returns to work.  The new legislation would extend these protections to six months after the employee returns to work.  Legal protections against redundancy would also be extended to parents returning from adoption leave or shared parental leave.

No date has yet been set on when these new changes will come into force. However, you can prepare by reviewing your current family leave and anti-discrimination policies and ensuring that managers are aware of their responsibilities towards employees who are pregnant or new parents.  

Every year brings new challenges in employment law and 2021 will be no exception.  If you have questions about what changes to expect in the coming year and how you can prepare for those,  contact us on 023 8071 7717 or email employment@warnergoodman.co.uk.

To receive regular Employment Law updates from the team regarding recent tribunal cases and legislation updates, you can subscribe to our weekly Employment Law Newsletter by completing our subscription form or emailing us at events@warnergoodman.co.uk

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.