Key Employment Law Changes

2020 brought several changes to employment law and 2021 looks to be no different, which most changes coming into effect in April 2021. We can assist businesses to look to the future and plan for the upcoming 2021 changes.

Right to work in the UK

Effective from 1 January 2021, the free movement of persons ended as a result of Brexit. This means that all foreign national workers seeking to enter the UK to work will require a visa, the most common being the Skilled Worker visa. The Skilled Worker visa route requires the applicant to have an offer of employment from an approved sponsor with a valid sponsor licence. Employers should ensure they complete right to work checks and keep a record of completed checks on employee personal files.

National Living Wage –

rises to £8.91 and age of entitlement drops to 23 years old. This is likely to come into effect in early April 2021.

Statutory family leave payments

Statutory maternity pay, paternity pay, adoption pay, shared parental leave and parental bereavement pay increase from £151.20 to £151.97per week. Again, likely to come into effect in early April 2021.

Unfair Dismissal

Financial award for compensation for unfair dismissal – this will increase, although the new rate has not yet been announced. Currently, it is £88,519 or 52 weeks’ salary whichever is lower.

The basic award used to calculate statutory redundancy payments and the basic award for unfair dismissal will increase.

Statutory sick pay

increases to £96.35. Men and women in each hourly pay quarter and the average gender pay gap using hourly pay

Changes to IR35

Due to having been implemented in April 2020. Changes to IR35 (the off-payroll tax legislation) were postponed to 6 April 2021.

From 6 April 2021, where a company engages self-employed contractors, providing their service through a service company (limited company), they will need to determine, whether, for the purposes of tax, they are considered an employee. If the contractor is considered an employee, for the purpose of tax, the company will be liable to deduct income tax and national insurance from the contractors’ fee in the same way they do from their employees’ wages. Companies who are unsure of the status of an individual can use the government online tools to ascertain whether they are considered an employee or not. This shall only affect companies with two of the following three:

1. An annual turnover in excess of £10.2 million
2. A balance sheet in excess of £5.1 million
3. More than 50 employees

Companies should review their consultant contracts to make their IR35 position clear.

The end of the furlough scheme

The Coronavirus Job Retention Scheme (CJRS) was introduced on 23 March 2020 to provide employers support where their operations had been severely affected by Covid-19. Employees’ were placed on furlough leave and received a minimum of 80% of their salary, up to £2,500, per month. As the CJRS is due to end on 30 April 2021, employers may need to consider restructuring their organisation and potentially making redundancies in order to continue trading.

From 01 December, notice pay has not been allowed to run alongside furlough/use of the CJRS. Employers using the furlough scheme are being named by the HMRC.

Incentive payment application deadline for employers who hire trainees or apprentices through Apprenticeship service

The Government will make a payment to Employers who hire new apprentices between 01 August 2021 and 31 March 2021.

Employers will receive an additional £2000 for apprentices aged 16-24 years old and £1500 for every apprentice who is 25 or over. Qualifying employers can apply for an incentive payment until 30 April 2021.

Proposed changes

1. Contrary to popular belief, women who are on maternity leave, can be made redundant. An individual selected for redundancy whilst on maternity leave will have the right to be placed into a vacant role, which they have the required skills for, without a competitive interview. Under proposed legislation, this protection will be extended for 6 months after the woman’s maternity leave ends.
2. A proposal was introduced in 2019 to make flexible working the default position unless employers did not have a good reason to. While the Queen announced that legislation would be introduced to implement this, possibly due to Covid-19, this has not occurred. Given that employers have been forced to implement working from home in a large proportion of industries due to Covid-19, a lot of concerns surrounding flexible working have been addressed. Therefore, this change may come later this year.
3. The implementation of the Employment (Allocation of Tips) Bill which would ensure that 100% of tips left for workers, go to them.

If you would like to speak to an expert employment lawyer, please contact us via email at contact@davenportsolicitors.com or telephone on 02079036888.

The material contained on this website contains general information only and does not constitute legal or other professional advice and should not be relied upon as such. While every care has been taken in the preparation of the information on this site, readers are advised to seek specific legal advice in relation to any decision or course of action.