As the UK perseveres through the challenge of the pandemic and employers continue to adapt to a very different landscape, a straightforward end to a tumultuous year is unlikely. However, while there’s still a lot of uncertainty, there are certain key pieces of legislation that can be prepared for. From the Coronavirus Job Retention Scheme to new statutory rates and the introduction of IR35 to the private sector, the following blog explores the key changes to employment law in 2021 and what the year ahead will hold for employers.
1. IR35 in the private sector
On 6th April 2021, IR35 came into force within the private sector, placing the onus on employers to determine the tax status of contractors they engage with via an intermediary (usually a personal service company). Medium and large-sized businesses will now assume the legal responsibility for deciding whether IR35 applies to their contractors and consultants, as has been the case for workers in the public sector since 2017. HMRC defines a medium-large client as having two of the three following features:
- turnover of more than £10.2m
- a balance sheet of more than £5.1m
- an average of more than 50 employees
If the rules apply and you determine your contractor as falling within IR35, you must deduct tax and NICs from fees and pay these directly to HMRC. To help employers and contractors prepare for these changes, we ran a series of webinars that answered the most frequently asked questions around IR35. Since employers will now be held liable should HMRC decide the status of a contractor has been incorrectly assessed, a careful review of contracts is essential in ensuring compliance. Once the business has made its assessment, it must notify certain parties of its decision and provide them with the opportunity to challenge it.
2. National minimum wage
Announced by the chancellor in the Spending Review last November, the national living wage rate increased by 2.2% on April 1st 2021 from £8.72 to £8.91. Employers should also take note that the age threshold for eligibility with the national minimum wage has been lowered to 23. Further changes recommended by the Low Pay Commission are as follows:
- Standard adult rate – age 21+: £8.36 (up from £8.20).
- Development rate – age 18+: £6.56 (up from £6.45).
- Youth rate – age 16+: £4.62 (up from £4.55).
- Apprentice rate: £4.30 (up from £4.15).
- Accommodation offset – maximum daily deduction: £8.36 (up from £8.20).
3. New statutory rates
New limits on employment statutory pay came into force in April 2021. These are as follows.
- From 6th April 2021, the statutory sick pay rate has increased from £95.85 per week to £96.35.
- From 4th April 2021, the rate of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay has risen from £151.20 per week to £151.97
- Redundancy: Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. This amount is £544 from 6 April 2021.
4. The Coronavirus Job Retention Scheme (CJRS)
In 2020, the government rolled the Coronavirus Job Retention Scheme, providing grants for organisations to cover a proportion of the salaries of furloughed staff. The CJRS has now been extended to 30th September 2021 – however, following the spring Budget announcements, there are changes to employee eligibility and employer contributions which take effect from May 2021 and July 2021 respectively.
For any claims to the CJRS made from 1st May 2021, employees must have been on the employer’s payroll at some point between 20th March 2020 and 2nd March 2021. Employers must remember that from 1st July, they are expected to pay 10% towards the hours that employees do not work. This increases to 20% in August and September as lockdown restrictions are expected to have eased entirely.
6. Health and safety
From 31 May 2021, ‘workers’ as well as employees will gain the right not to be subjected to a detriment in health and safety cases. This is as per the draft Employment Rights Act 1996 (Protection from Detriment in Health and Safety Cases) (Amendment) Order 2021, which will confer on workers the right not be subjected to a detriment for leaving, or refusing to return, to their workplace in circumstances where they reasonably believe it would put themselves or others in serious or imminent danger, or for taking steps to protect themselves.
The Order is currently awaiting Parliamentary approval and is due to come into force on 31 May 2021. If accepted, the Order will allow workers to challenge the safety of a workplace and act accordingly, for example refusing to return until changes have been made. It will further protect workers from being docked wages or rights such as holiday pay as a result of their actions.
7. EU Settlement Scheme closes
On the 30th June 2021, the EU Settlement Scheme closes to applicants, and new right to work checks will be introduced. Although there is no legal obligation for employers to communicate the EU Settlement Scheme to workers, those eager to retain members of their UK-based workforce who are EU citizens would do well to remind employees of the deadline. Employers should note that an offer for employment or continued employment cannot be dependent on an individual having applied for settled status.
From 30th June onwards, the new immigration rules for recruiting people outside the UK will apply. That means job applicants will not be able to rely on their EU passport or their identity card as proof of right to work in the UK. Instead, they will need to provide proof of appropriate visa or status under the EU Settlement Scheme. If you have any concerns about your existing Right to Work checking processes or compliance with the points-based immigration system, it’s worth consulting with a specialist lawyer as early as possible.
8. Gender pay gap reporting
From 4th April 2021, private and voluntary sector employers in England, Wales and Scotland with at least 250 employees are required to publish details on any differences in pay and bonuses between their male and female employees.
However, the Equality and Human Rights Commission has further announced that enforcement action against employers failing to report on their gender pay gap will start on 5th October 2021, after it was suspended last year due to the pandemic. The change means that employers have another five months to report their data for their 2020 snapshot date before legal action begins.