Last reviewed 17 December 2020

As we look forward to 2021, we must not lose sight of key employment law developments that are expected. Ben McCarthy, lead researcher and employment law writer at Croner-i, outlines the key developments to be aware of below.

New immigration laws

As the coronavirus pandemic raged through 2020, employers could almost be forgiven for forgetting about Brexit. However, as 2020 entered its dusk, the continued efforts of the UK to leave the European Union (EU) once again returned to dominate the media, with promises of big changes to immigration laws expected from 1 January 2021. From this date, free movement of persons is to end, meaning individuals from the EU will no longer have the automatic right to live and work in the UK. Instead, a whole new set of immigration laws are to be introduced.

All foreign nationals will now need to seek to enter the UK in the same way, and there will be a number of methods in which they can seek to do this. However, the majority are expected to use the new “Skilled Worker Route”. To be able to work in the UK legally under the “Skilled Worker Route”, foreign nationals have to meet specified criteria in order to earn at least 70 points. Crucially, this involves being offered a job from an approved sponsor. For employers who wish to take on foreign nationals under this route, they must now apply for a license from the Government as soon as possible, which can be done through the use of gov.uk.

The end of the furlough scheme

By now, the word “furlough” seems extremely familiar, and indeed it looks set to remain so as we head into 2021. The Job Retention (Furlough) Scheme remains a significant part of the Government’s fight against coronavirus, covering a proportion of staff wages for employers so as to help them avoid large-scale redundancies. However, with the new year, and the continued vaccine roll out, it is likely that 2021 will finally see the scheme end. Currently, the Government has announced that it will end on 30 April 2021, having confirmed a further extension to the scheme from 31 March 2021 on 17 December 2020. Whether it will be extended further from this date remains to be seen.

Employers should start to plan the steps they are going to take when they no longer have this support from the Government. If they are considering redundancies, they should also be prepared to think about alternative options.

The return of gender pay gap reporting

Since 2018, employers with at least 250 members of staff have had a lawful obligation to publish annual reports outlining the differences in the average earnings between men and women in their company. However, the compulsory production of gender pay gap reports was paused in 2020 due to the pandemic. Until the Government says otherwise, employers can expect that this obligation is to return next year, meaning they need to be ready for it.

Production of a report works by taking a snapshot of a company’s pay data on a specific date. To produce a report for 2021, this “snapshot date” will be 30 March 2020 for public sector companies, and 5 April 2020 for private companies. This could present numerous issues for a company; as staff who are not earning their full wages do not need to be included, which will include any staff who were furloughed at the time, figures companies end up publishing may not be fully representative of the actual situation. To tackle this, companies should clearly outline in accompanying narrative why the figures present the data that they do.

Companies should also note that the need to publish a report is there if they had at least 250 members of staff on their relevant snapshot date in 2020. Therefore, they will still need to produce a report this year even if staffing numbers have decreased.

New IR35 requirements

From April 2021, eligible large and medium-sized organisations engaging contractors through intermediary companies will also be responsible for assessing the employment status of those contractors. Under the new rules, where workers are engaged through their own companies, responsibility to apply IR35, and to pay any associated tax and National Insurance contributions (NICs), will fall to the private company, agency or other third party paying the worker’s company. This has already previously been implemented in the public sector.

These new rules were originally expected in April 2020 but were delayed due to the coronavirus pandemic.

More companies to produce Modern Slavery statements

Currently, organisations which supply goods or services, carry on business in the UK and have a total turnover of £36 million need to produce an annual statement, outlining the steps that they are taking to combat instances of modern slavery in their own business or within their supply chain. The Government has announced plans to require an increase the number of companies that need to produce a Modern Slavery statement.

It is expected that public sector organisations with a budget of at least £36 million will be required to publish a statement. Statements will also be required to cover specific topics and be published on a new government registry. It has not been confirmed when the new requirements will come into force, but the registry is expected to be launched in “early 2021”.

Extended redundancy protection for mothers

Currently, those on maternity leave who are at risk of redundancy must be offered suitable alternative roles in advance of others. This protection ends once the employee returns to work. Future changes will mean that this protection starts from the date the employee informs her employers that she is pregnant. It doesn’t matter whether the employee informs them verbally or in writing. This protection will last for a further six-month period once the employee returns to work.

The extended protection will also be available to those on adoption leave and shared parental leave. It is currently not confirmed when this will come into force.

Increase to the minimum wage and other statutory rates

The Government has confirmed that minimum wage rates, including the National Living Wage, are still to increase from April 2021 despite the coronavirus pandemic. Additionally, the National Living Wage, currently paid to those aged 25 and over, is to be expanded to include those aged 23 and over. The rates are to increase as follows:

National Living Wage (23+)

£8.72

£8.91

2.2% increase

21-22-year-old rate

£8.20

£8.36

2.0% increase

18-20-year-old rate

£6.45

£6.56

1.7% increase

16-17-year-old rate

£4.55

£4.62

1.5% increase

Apprentice rate

£4.15

£4.30

3.6% increase

Accommodation offset

£8.20

£8.36

2.0% increase

Additionally, proposed increases to family leave and sick leave pay have been announced. Whilst these are yet to be confirmed, it is highly unlikely that these rates will change prior to their implementation come April. Weekly pay for maternity, paternity, shared parental, parental bereavement and adoption leave is set to increase from £151.20 per week to £151.97 per week, while statutory sick pay is to increase from £95.85 to £96.35.

Conclusion

While it is hoped that 2021 will be better for businesses than 2020, one thing that remains certain is that this period remains a key time for development of employment law. To this end, employers must make sure they keep up to date with all legal expectations and take the steps they need to in order to prepare.