12/01/2021

Six employment law changes to look out for in 2021

As the UK continues to grapple with the coronavirus pandemic, and adapts to its new position outside the EU as a country with “third status”, what does 2021 hold for employers? While there’s still a lot of unknown, here are six changes employers can already prepare for – as explained by Richard Thomas.

The Coronavirus Job Retention Scheme (CJRS)

The Coronavirus Job Retention Scheme (CJRS) has now been extended to 30 April 2021. The next Budget, due on 3 March 2021, will outline the next steps for economic support. If the vaccine rollout goes according to plan, the Government will be under significant pressure (from their own backbenchers) to end the CJRS, which could lead to large-scale redundancy from April 2021.

The off-payroll working rules (IR35)

The off-payroll working rules (IR35) will be extended to large and medium-sized companies in the private sector, effective 6 April 2021.  It was initially due to come into force in April 2020 but was postponed to help businesses during the pandemic. Many Conservative MP’s are lobbying against this change, but it will likely come into force in April. Businesses will be obliged to determine the employment status of individuals with whom they engage. HMRC released an updated version of their online checking tool (known as ‘CEST’) in 2020, and businesses are encouraged to use this to obtain a determination.

National Minimum Wage

Many workers will receive a pay increase from 6 April 2021 following a rise in the National Minimum Wage (NMW) to £8.91 per hour. More young people will become eligible as the age threshold will be lowered from 25 to 23.

The Government is consulting on the use of non-compete clauses, and the consultation closes on 26 February 2021. Many employers rely upon non-compete clauses, particularly in sectors with new start-ups appearing (such as the recruitment sector), and the ability to continue to use these to stop an ex-employee from working for or establishing a competing business may well be constrained or ended. If this does happen, employers will need to review and possibly update their current employment contracts and consider how they protect their business from ex-employees working in competition.

Business immigration

EU nationals who started living in the UK by 31 December 2020 can apply for settled or pre-settled status under the EU Settlement Scheme, and the deadline for doing this is 30 June 2021. Settled status, which allows the worker to stay in the UK indefinitely, will usually be granted if the worker can demonstrate that they have lived in the UK continuously for five years. If the worker has lived in the UK for less than five years, they can apply for pre-settled status, which can become settled status at the five-year point. A recent survey showed that over 6,000 EU nationals currently working in Wales had not applied for either – which could cause real difficulties after 30 June 2021.

Brexit brought an end to Freedom of Movement, and the UK has now implemented a points-based immigration system applying to all non-UK and Irish Nationals. Any non-UK/Irish recruits will need to be sponsored by a UK employer, who will need a licence from the Home Office to do so. Applications for this licence can take eight weeks or more to process.

The new Employment Bill

The new Employment Bill is expected to be published in 2021, which may include the right for all workers to request a more predictable and stable contract after 26 weeks of service and extending redundancy protection to include pregnancy and maternity discrimination. It could also reduce the grounds on which employers would be able to refuse requests for flexible working. It will be interesting to see if the Government also looks to change any employment laws now the UK has left the EU.

Agency Workers Regulations and GDPR

One area that might be changed is the Agency Workers Regulations, which provide for equal pay and conditions for agency workers who work alongside permanent workers in a business. There is also talk of the UK leaving the General Data Protection Regulation (GDPR) regime, which deals with data protection, storage, and transfer provisions. We will need to watch this space.

If you have any question on any of the above, please don’t hesitate to get in touch.