What’s new in employment law for 2021?
The employment landscape continues to be dominated by ongoing Government measures in relation to Covid-19.
There are, however, other employment law changes due to be made in 2021, which individuals, employers and HR professionals should be aware of. In this article, our employment partner Emma Clark and paralegal Imogen Dale set out the key dates for your diary as well as highlighting the significant changes in the future.
All deadlines are correct at the time of writing, but they may be subject to change.
Dates for your diary
April (date tbc but expected to be early April): Changes to financial awards and wages
- National Living Wage (mandatory hourly rate) rises to £8.91 and age of entitlement drops to 23 years old.
- Statutory family leave payments – the rate of statutory maternity pay, paternity pay, adoption pay, shared parental leave and parental bereavement pay increases from £151.20 to £151.97 per week.
- The financial award for compensation for unfair dismissal (currently £88,519 or 52 weeks’ salary, whichever is lower) will increase, although the new rate has not yet been announced.
- The basic award used to calculate statutory redundancy payments and the basic award for unfair dismissal will increase, although the new rate is yet to be confirmed. The current maximum is £538 per week.
- Statutory sick pay increases from £95.85 to £96.35.
4 April: Gender pay gap reporting
After the suspension of enforcement action against employers in 2020 that did not report their gender pay gap information, the reporting period recommences this year.
All employers with a headcount of 250 or more must report and publish their gender pay gap data gathered by 4 April 2021, including the percentage of men and women in each hourly pay quarter and the average gender pay gap using hourly pay.
Employers may face problems when creating accurate information to submit as a result of the furlough scheme, which paid the lower of 80% of an employee’s wage or £2,500 per month, and could distort the general remuneration practice. Although the Government has not yet provided guidance as to how it will account for such discrepancies, we suggest employers add detailed explanations to the data, outlining the reasons for skewed data as a result of the pandemic.
Further guidance is available on the Government’s website.
6 April: IR35 (delayed from 2020)
The rules for engaging individuals through personal service companies will apply to all medium and large businesses within the private sector.
These organisations will now have to assess the contractor’s status (as opposed to the previous rules where the contractor’s status was self-determined) to identify whether they are caught by the off-payroll working rules.
HMRC has a Check Employment Status for Tax service to help businesses determine whether the IR35 rules apply to any contracts extending beyond April 2021.
30 April: extension for Coronavirus Job Retention Scheme
The CJRS deadline continues to be extended as a result of the ongoing pandemic, with furlough payments due to cease on 30 April 2021.
Employees who were employed and on payroll on 30 October 2020 can be furloughed for any timespan and any work pattern.
From 1 December, notice pay has not been permitted to run alongside furlough/use of the CJRS, and employers using CJRS will be named by HMRC on 26 January 2021.
Employers can no longer submit claims for periods ending on or before 31 October 2020, or for furlough days in December 2020.
30 April: Incentive payment application deadline for employers hiring trainees or apprentices through Apprenticeship service
The Government has introduced payments to support employers who hire new apprentices between 1 August 2020 and 31 March 2021.
In addition to the £1,000 that employers already receive for hiring an apprentice (who is either 16 to 18 years old or under 25 with an education, health and care plan or in local authority care) applicants will receive £2,000 for apprentices aged 16–24 years old, and £1,500 for every apprentice who is 25 or over.
Qualifying employers can apply for an incentive payment until 30 April 2021.
What changes can we expect in the future?
Pregnancy and Maternity (Redundancy) Protection Bill 2019-21 (still at proposal stage)
Many employment-related proposals due to be considered or brought into force in 2020 were delayed as a result of Covid-19.
One of the key changes to look out for is the Pregnancy and Maternity (Redundancy) Bill 2019-21. If it is brought into force, which we expect will be around the end of 2021, it will extend protections for employees at risk of redundancy.
Currently, an employee on maternity, adoption or shared parental leave who is at risk of redundancy has the right to be offered any suitable alternative vacancy available (sometimes called ‘first bite of the cherry’). The Bill proposes to extend this to pregnant employees who have informed their employer of their pregnancy, employees who have returned from maternity or adoption leave within the previous six months, and those returning from shared parental leave.
There has also been discussion about extending the tight limitation period to bring a pregnancy and maternity discrimination claim in the employment tribunal to six months, but the Government has not provided any further details on this as yet, despite consulting on the changes in 2019.
Consultation on banning or curtailing non-compete clauses
The Government has launched a consultation on measures to reform post-termination non-compete clauses in employment contracts, with a particular focus on whether:
- to make such restrictions enforceable only when the employer provides compensation during the term of the clause;
- or to ban the clauses altogether.
There is already well-established case law on this point, and banning such non-compete clauses could cause damage to the many companies whom the Government claim they want to protect, and discourage start-ups from being based in the UK.
The consultation closes on 26 February 2021.
Consultation on banning the use of exclusivity clauses in contracts, which prevent people on low incomes working for other employers
Views are also being sought on a proposal to extend the ban on exclusivity clauses beyond zero-hours contracts to contracts where the workers’ guaranteed weekly income is less than the Lower Earnings Limit, currently £120 a week.
The closing date for this consultation is also 26 February 2021.
Other considerations
There has been debate in recent weeks, post-Brexit, as to whether the Government is considering removing:
- the 48-hour working week (calculated over a 17-week reference period); and
- the need to include overtime payments in calculating holiday entitlement.
The Business Secretary Kwasi Kwarteng has denied this is being considered or that he intends to whittle down workers’ rights.
It is, however, clear that changes may be made to current employment law because the Government has confirmed the start of a consultation on existing EU employment rights.
The wording in the UK-EU Trade and Cooperation Agreement (‘TCA’) means that the Government should be cautious about implementing changes that reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade.
It is possible that many employees will continue to choose to opt out of a 48-hour week, which will mean that changing the legal position may have little to no impact on trade overall.
Keystone’s employment law partner Malcolm Mason explores the impact of the TCA from an employment law perspective and what changes we can expect in his article The impact of Brexit on employment and labour in the UK.
If you would like any further advice on any aspect of this article, please contact Emma Clark and Imogen Dale, or your usual Keystone employment law contact.