2021 is set to be another big year for employment

News Article

Beginning with Brexit and a further Covid lockdown, there can be little doubt that 2021 is going to be a significant year for employment law.

However, Brexit and lockdown only represent the tip of the iceberg when it comes to employment changes that employers need to know about. This article sets out some of the key changes that employers need to be careful not to fall foul of.

The following are changes that are coming into effect this year, or which we expect to see:

Brexit – The impact on immigration and recruitment for employers

Employers were already obligated to ensure that employees have a legal right to work in the UK, but Brexit sees changes to these rules.

From 1 January 2021, EU/EEA/Swiss citizens arriving in the UK will need to gain permission to work in the UK. The rules will be aligned with the rules that apply to citizens from any other country in the world.

Employers are under a legal duty to prevent illegal working. The government can issue fine of up to £20,000 per employee for failing to ensure that employees have a legal right to work in the UK. To gain a ‘statutory excuse’ against the civil penalty, an employer needs carry out the ‘right to work’ checks in accordance with the Home Office process. Since the 29 January of 2019, employers have been able to rely on the Home Office online right to work checking service to be granted the statutory excuse. If employers use this service to check an individual’s immigration status, they will not be required to make further documentary checks.

EU citizens who are currently working for employers, or who are recruited before 31 December 2020, need to take action to gain permission to remain in the UK to continue living in the UK after 30 June 2021. Employees must apply to the EU Settlement Scheme and may need to apply for a visa after 1 January 2021.

Sexual harassment

The government’s response to the consultation on workplace sexual harassment was expected in spring 2020 but it has not yet been published and is therefore something to look out for over the coming year.

Additionally, there are some further employment-related changes we expect to see in April this year:

6 April 2021

Changes to the formula for post-employment notice pay (PENP)

The government has published legislation amending the current formula for post-employment notice pay (PENP) to avoid unfair outcomes if an employee’s pay period is defined in months, but the contractual notice period is expressed in weeks. The legislation also introduces changes to ensure non-residents who receive PENP are taxed fairly. The changes will have effect from 6 April 2021 and will apply to individuals who have their employment terminated, and where the termination payment is received, on or after 6 April 2021.

National Living Wage and National Minimum Wage increases

On 25 November 2020 the government accepted in full the Low Pay Commission’s proposed increases to the national living wage and national minimum wage rates which will come into effect on 6 April 2021 – The NLW, which currently applies only to workers age 25 or over, will increase by 2.2% and will be extended to 23 and 24-year-olds for the first time.

The new rates will be:

  1. Age 23 or over (NLW rate): £8.91 (up 2.2% from £8.72).
  2. Age 21 to 22: £8.36 (up 2% from £8.20).
  3. Age 18 to 20: £6.56 (up 1.7% from £6.45).
  4. Age 16 to 17: £4.62 (up 1.5% from £4.55).
  5. Apprentice rate: £4.30 (up 3.6% from £4.15).

Accommodation offset £8.36 per week (up 2% from £8.20).

Off-payroll working in the private sector

The government had planned to extend the IR35 reforms on off-payroll working in the public sector to the private sector in April 2020. The postponement was in response to the COVID-19 pandemic, and was stated to be a deferral, not a cancellation, with the government remaining committed to reintroducing the policy. The reforms will apply to large and medium-sized businesses only from 6 April 2021.

30 April 2021

Coronavirus Job Retention Scheme ends

On 5 November 2020, the Chancellor announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 31 March 2021. The was then further extended to 30 April 2021 following further restrictions imposed as a result of the pandemic. Employers are be able to claim 80% of employees’ wages, capped at £2,500 for hours not worked through out this entire period without risk of increased contributions. Employers must however continue to pay the national insurance and employer pension contributions on employees’ furlough pay.

Late April:

Structure of employment hearings

On 29 April 2020, the Law Commission published its report on employment law hearing structures. The report sets out 23 recommendations for reforms to both the powers and jurisdiction of employment tribunals including changing the three-month limitation period to six months and increasing the employment tribunal’s £25,000 limit for contract claims to £100,000.

A full government response to the Law Commission’s is expected in late April.

For specialist legal advice on the employment law changes we expect to see in 2021, please contact us today.