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Employment law changes to look out for in 2021

January 18, 2021

If you’re a smaller business weary of coping with a surge of HR issues during 2020, whether caused by Covid-19, Brexit or just day-to-day operations, we feel for you and help is at hand!
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The UK has just been identified as one of the most complex HR and payroll environments in Europe, and this has been made worse in 2020 by the uncertainty of Brexit, and the sheer volume of new employer obligations caused by the pandemic. Many have had to work at lightning speed setting up staff to work effectively from home or from a Covid-19 secure workplace, or making difficult decisions on whether to furlough staff or resort to redundancies, not to mention supporting staff through exceptional physical and mental health pressures.

2021 is sadly likely to deliver more of the same issues, at least in the early months of the year while major lockdown restrictions continue and we absorb fully the changes caused by the last-minute Brexit deal.

In the meantime, why not have a look at our handy guide, below, to key employment law changes to watch out for this year. We hope this helps your planning of another difficult year, and do get in touch if you like the sound of how we can support you more.

Brexit related employment law changes now in force

1 –  A new UK immigration system for employing non-UK workers

2 – A stop gap solution for EU data transfer issues for at least the next 4 months

Coronavirus related employment law changes we know are coming

3 – Extension of the furlough scheme to the end of April 2021

4 – Budget announcements, now set for 3rd March, of future government support for businesses beyond April

Other definite key employment law changes for 2021

5 – National Minimum Wage rates will be increasing in April

6 – IR35 : Larger private companies will become responsible for checking contractors’ employment status from April

7 – Supreme Court guidance on employment status of gig economy workers

8 – ACAS pre-tribunal early conciliation period extended to 6 weeks from December 2020

Other possible changes to employment law to watch out for

9 – Good Work Plan changes giving extra rights to workers

10 – Changes to post termination non-compete clauses in employment contracts

11 – A new legal duty on employers to protect workers from harassment in the workplace

1 – A new UK immigration system for employing non-UK worker

A new UK immigration system is now in force for anyone coming to the UK for work. From 1st January 2021, those coming from abroad, whether from EU countries or elsewhere, will be subject to a new points-based immigration system. The new regime will make it more difficult for you to hire EU or EEA nationals, as many will now require a visa to lawfully live and work in the UK, unless they have settled or pre-settled status under the UK’s EU Settlement Scheme. Irish nationals will continue to be able to live, work and study in the UK without obtaining a visa.

Many work visas require the individual to be sponsored by their employer, so organisations who want to recruit from other countries going forward will need to apply for a sponsorship licence.

There is a deadline of 30th June 2021, for EEA nationals who are living in the UK on 31st December 2020, to apply for settled or pre-settled status under the EU Settlement Scheme. We recommend that you strongly encourage any of your staff who qualify, and who haven’t yet done so, to apply under the scheme before the end of June, to get the right to continue living and working in the UK.

You’ll also have to make the new immigration system part of your Right to Work checks for new employees.

2 – A stop gap solution for EU data transfer issues for at least the next 4 months

As part of the last-minute trade deal secured with the EU at the end of December, personal data can continue to flow freely from the EU or EEA to the UK for at least the next 4 months. This will include employee personal data if you have staff working from the EU or EEA, for example.

This agreement has removed, for now, one of the potential headaches for employers of needing to put in place lengthy alternative contracts with every different body transferring data to them from the EU or EEA to the UK. It is hoped that in this 4 month period, an adequacy decision will be made by the EU that confirms that these data transfers can continue without further requirements.

Given that the UK has already adopted GDPR during its former membership of the EU, it is to be hoped that this will happen. If need be, this 4 month period can be extended to 6 months.

For now, this means that organisations can continue to freely receive and process personal data from the EU without having to make any changes to data protection practices.

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3 – Extension of the furlough scheme to the end of April 2021

Originally the furlough scheme – the Coronavirus Job Retention Scheme (CJRS) – was due to end on 30th June 2020. As the pandemic continued, it was extended until the end of October 2020 and then again to 31st March 2021. In a surprise announcement in December 2020 the Government announced a further extension to the end of April 2021 and confirmed that it would be retaining the level of government support, for the whole of this extended period, at 80% of wages, up to a maximum of £2,500 per month.

From 1st November 2020, you can take advantage of the scheme, even if you haven’t used it before. You can either fully furlough employees, in which case they can’t work for you for that time, or flexibly furlough them, so that they can still do some work for you.

The latest guidance has confirmed that you can use the CJRS to furlough staff who are unable to work because of childcare issues caused by school closures, and also those who are advised to shield because they are extremely clinically vulnerable.

Our software and support service can help you with all the details of which staff are eligible, what agreements you need to put in place, and what records you need to keep to make your applications. We have made our software straightforward and quick to use, and we are on hand to help you interpret the ever-changing guidance.

4 – Budget announcement, now set for 3rd March, of future government support for businesses beyond April

As you may have seen, the Budget was postponed from November last year, at the same time as the Chancellor announced the extension of the furlough scheme and some other elements of business support. The new Budget date has now been confirmed as 3rd March 2021.

We expect this Budget to set out the next phase of support to protect jobs. It is likely to be a very different Budget, not just because of the pandemic, but also as the first UK Budget since leaving the EU.

The date of 3rd March has also been chosen so that it is ahead of the minimum 45 day redundancy consultation period for collective consultation before the furlough scheme ends on 30 April 2021.

It is still too early to predict what support could be announced, but the temporary certainty provided by the extension of the furlough scheme gives some interim relief for struggling businesses.

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5 – National Minimum Wage rates will be increasing in April

From 1st April 2021 national minimum wage rates are going up again, as they have in previous years, but the increases this year are more modest.

However, the big change this time is that the National Living Wage, which currently only applies to workers aged 25 or over, is being extended to those who are aged 23 or over.

  • National Living Wage for workers 23 and over: £8.91 (from £8.72)
  • National Minimum Wage for workers aged 21 – 22: £8.36 (from £8.20)
  • National Minimum Wage for workers aged 18 – 20: £6.56 (from £6.45)
  • National Minimum Wage for workers aged 16 to 17: £4.62 (from £4.55)
  • Apprentices minimum wage: £4.30 (from £4.15)

The government has also reinstated its naming and shaming policy, for any organisations which owe arrears of more than £500 to their staff.

Our HR Software can help you deal with these changes quickly and efficiently, alerting you to possible underpayments and helping you with planning and communication to staff.

We also expect the Supreme Court to publish their decision soon on whether those staff who are required to ‘sleep in’ overnight at work should be paid minimum wage for the whole time they are at work, including when in bed asleep or resting, or just the time they are woken to work. This case could have huge consequences for the care sector, in particular, depending on the decision.

6 – IR35: Larger private companies will become responsible for checking contractors’ employment status from April

Postponed from last year because of Covid-19, Medium and larger businesses will soon take on responsibility for deciding a contractor’s employment status for tax purposes and also for accounting to HMRC and deducting tax and NICs. (This is already the case for public sector employers.) This applies to contractors operating through personal service companies.

We thought this was happening last April but the pandemic changed everything and the government delayed bringing these new rules into force for a year, so they will now take effect from 6 April 2021.

The new rules will create additional burdens for those using contractors and may discourage some businesses from using contractors at all, even when they are genuinely self-employed. The good news is that there is a small business exemption for those meeting any 2 of these 3 conditions:

  • you have an annual turnover of £10.2m or less;
  • you have a balance sheet total of £5.1 million or less; or
  • you have 50 employees or less.

7. Supreme Court guidance on employment status of gig economy workers

It has always been difficult for employers to correctly work out the employment status of some individuals, particularly those engaged under self-employed contracts, or who work on a casual basis.

Some individual drivers have brought a claim against transport company Uber, claiming that they should be classified as workers and therefore entitled to some employment rights in areas like rest breaks and holidays, for example.

Uber has argued, so far unsuccessfully, that it is simply a technology platform which puts drivers in touch with passengers. Its operating model works on the basis that its drivers are self-employed and are free to accept or reject work. The case has reached the Supreme Court and we expect their decision to be published in 2021.

Although this case won’t provide a single test for employment status, it will hopefully provide guidance that organisations operating ‘gig’ arrangements could apply to decide whether their self-employed contractors are actually workers and are entitled to some employment rights. Our HR support service will be on hand, when the decision is finally published, to help our customers consider the guidance in detail and any impact on their operations.

8 – ACAS pre-tribunal early conciliation period extended to 6 weeks from December 2020

Before filing an Employment Tribunal claim, an employee is required by law to try to resolve their workplace dispute by using the ACAS Early Conciliation process. ACAS operates as an independent and impartial organisation, to try to help the employee and employer reach a settlement.

On 1 December 2020, the rules for this process were changed. Now, the compulsory period for early conciliation has been increased from 4 weeks to 6 weeks, whereas before it lasted 4 weeks with an option to extend. ACAS conciliators now also have greater discretion to correct errors in the paperwork during this period.

The new six week period will hopefully allow more parties more time to resolve their disputes and avoid a Tribunal claim altogether, potentially saving time, costs and the stress of litigation.

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Other changes to employment law that we could see in 2021

  • Before the effects of the pandemic knocked many initiatives off course, the government was actively considering bringing in the following changes, as elements of the Good Work Plan which may well reappear in 2021:
  • A new right to a week’s unpaid leave for employed carers
  • Extended redundancy protection for pregnant women or those on maternity leave
  • A new right for all workers to request a more ‘predictable’ contract, particularly aimed at those with variable and unpredictable hours, like zero-hours workers
  • A new right for workers to receive their tips in full
  • Allowing parents to take extended leave for neonatal care
  • Making flexible working the default unless employers have a good reason not to
  • A new, single enforcement body for employment rights
  • The government is also currently consulting on ways to change post termination non-compete clauses in employment contracts. Possibilities under consideration range from banning them altogether, to requiring employers to compensate employees for the duration of the clause, similar to the position in Germany, France and Italy.
  • There has been significant consultation, starting in 2019, on how best to tackle sexual harassment in the workplace. A new legal duty on employers to protect workers from harassment in the workplace has been proposed, which could allow the Equality and Human Rights Commission (EHRC) to take enforcement action regardless of whether the individual has brought a tribunal claim.
  • Some key Supreme Court appeal hearings regarding holiday pay will take place later this year looking at issues such as whether holiday pay should include regular voluntary overtime and whether teachers and others engaged on a ‘term time only’ or part year contract are entitled to a minimum 5.6 weeks’ holiday per year, even though they don’t work for the whole year, rather than a pro-rated amount. However, in view of the current delays in the courts and tribunal system it is unlikely that the judgments will be announced until 2022.

If you want help dealing with any of the changes coming in 2021 that we already know about, or you want to rely on expert HR advice and know-how to guide you through whatever other employment law changes 2021 might bring from this extensive list, then please get in touch to see how we can help.

How citrusHR helps hundreds of smalls businesses just like you:

Expert HR Advice

Our employment law and HR experts ensure that our customers’ employment contracts and policies are always up to date and are available for friendly, tailored advice over the phone.

Each month, citrusHR customers receive legal updates, written in plain English for people running small businesses, so they can quickly assess what’s relevant to them and whether any changes are needed to keep their business on the right side of the law.

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Our HR software can quickly and easily save you lots of time and help you to stay compliant with a whole range of HR issues, from calculating holiday to getting payments right. It also means you can keep all data about your staff in one place, and automatically deletes information, helping you to meet your data protection (GDPR) obligations.

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