Employment Law Solicitor Advice: Employment Law Changes in 2021

Human ResourcesEmployment Law
Written By Cacy Neilson

For many small businesses, the end of 2020 may well have been spent trying to navigate the latest rounds of COVID related tier changes, lockdowns and 11th hour interpretations of the last-minute Brexit agreement. As a business owner, I’m sure you are looking forward to a time when you can simply focus on running your business without the rolling waves of external factors that characterised 2020!   

However, there are a handful of significant employment law changes due to take effect in 2021 that startups and SMEs should be aware of, therefore in this week’s newsletter, our Employment Law Solicitors in London have taken a look at a summary of key changes due to come into effect in 2021. 

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 end engager, agency or other third party are responsible for operating IR35, as opposed to the contractor being engaged. However, small businesses are exempt.

Currently it, is the PCS or intermediary’s responsibility to assess the worker’s employment status, and therefore IR35 status.  But, 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, along with employer National Insurance Contributions, and make the appropriate payment to HMRC.

Brexit and New Immigration Rules

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. European Economic Area 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 seek to establish a new European Works Council. Discussions on requests that had been submitted before 1 January should continue.

Coronavirus Job Retention Scheme (CJRS)

As you are probably aware, the CJRS has been extended to 30 April 2021 and employers can furlough qualifying employees even if they had not previously made use of the scheme. The CJRS will cover 80% of furloughed employees’ wages, capped at £2,500 per month.

An important development you may not be aware of is the scheme now includes the opportunity for employers to furlough qualifying employees who are struggling to balance working and home-schooling 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 it is speculated that the furlough scheme may be extended beyond 30th April 2021. Please contact us directly if you need bespoke advice. 

Statutory Pay Increases

New rates for statutory pay will be effective from 4 April 2021 and are outlined below:

  • 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. 

There are also new national minimum wage rates which will come into effect from 6 April 2021, which are:

  • The National Living Wage (NLW) will now apply to those aged 23 and over, not just those over 25 and will be £8.91 per hour.

  • The NLW will increase for ages 21 and 22 inclusive from 1st April 2021 – from £8.20 to £8.36 per hour.

  • The NLW will increase for ages 18 to 20 inclusive – 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.

If your business requires bespoke support or guidance covering any of the employment law changes mentioned above, please don’t hesitate to get in touch with our employment law solicitors in London.

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