The emphasis for many employers at the moment is understandably on managing the huge impact of COVID-19 and responding to the measures the government has brought in to support employers. Mercifully the employment law agenda for the year ahead is brief, but there are a few changes that businesses will need to be aware of that are due to take effect in 2021. An introduction to the key employment law changes in 2021 is outlined below.
Coronavirus Job Retention Scheme (JRS)
The JRS has been extended to 30 April 2021. Employers can furlough qualifying employees even if they had not previously made use of the scheme. The scheme will cover 80% of furloughed employees’ wages (capped at £2,500 per month).
The scheme now includes the opportunity for employers to furlough qualifying employees who are struggling to balance working and homeschooling as a result of school closures along with those who are advised to shield and cannot work from home.
The rules on the JRS are under regular review and some differences apply in each of the four nations.
Off-payroll rules for the private sector (IR35)
Changes to the IR35 rules on off-payroll working in the private sector come into effect on 6 April 2021, having been delayed by a year due to the coronavirus crisis. The changes will affect medium and large businesses in the private sector that use individual contractors through a Personal Services Company (PSC) or intermediary.
The changes will directly affect medium and large organisations, ie that meet two or more of the following criteria:
- have over 50 employees
- have a net turnover in excess of £10.2m
- have over £5.1m on their balance sheet.
At the moment it is the PCS or intermediary’s responsibility to assess the worker’s employment status, and therefore IR35 status, and to deal with any tax implications.
From 6 April 2021, the end-user (client) must assess whether the individual would have been an employee if they had contracted directly with them (ie not through a PSC or intermediary). If they decide the worker would have been an employee, then the organisation that pays the PSC/intermediary will need to deduct income tax and employee National Insurance Contributions (NICs) from the fees and pay these and employer NICs to HMRC.
More information is available on the government website: Business tax: Off-payroll working (IR35
Brexit and the new immigration system
The end of the Brexit transition period means that there is now a new points-based immigration system in place which applies to all migrant workers. EEA nationals arriving in the UK from 1 January 2021, and their employers, will need to comply with the same visa requirements as other non-UK nationals.
European nationals who were living in the UK before the end of the transition period have until 30 June 2021 to apply to remain and work under the settlement scheme.
Changes have also been made to the Visa system, with the Tier 2 (General) work visa category replaced by the Skilled Worker visa.
European Works Councils
Following the end of the Brexit transition period, from 1 January 2021 employees in the UK cannot newly seek to establish a European Works Council. Discussions on requests that had been submitted before 1 January should continue.
Statutory pay increases
The rates for 2021/22 statutory maternity, paternity, adoption, parental bereavement and shared parental pay is set to increase from £151.20 to £151.97 per week.
The rate of statutory sick pay (SSP) increases from £95.85 to £96.35 per week.
New rates will be effective from 4 April 2021.
New National living and national minimum wage rates
The following rates will take effect from 6 April 2021:
- The NLW for workers aged 23 and over will be £8.91 per hour (the NLW has been extended to 23 and 24-year-olds for the first time).
- The NLW will increase for ages 21 and 22 – from £8.20 to £8.36 per hour.
- The NLW will increase for ages 18 to 20 – from £6.45 to £6.56 per hour.
- The NLW will increase for ages 16 and 17 – from £4.55 £4.62 per hour.
- The apprentice rate will increase from £4.15 to £4.30 per hour.
Gender pay reporting
Employers with more than 250 employees must again report annually on their gender pay gap.
The deadline for submitting gender pay gap reporting, which was suspended in 2020 due to the coronavirus, is:
- 30 March 2021 for public sector employers.
- 4 April 2021 for private sector employers and voluntary organisations.
If you would like help with any of the above employment law changes 2021, please get in touch with our HR Services team at HR@ifteam.co.uk.