Employment update 2021: the year ahead
2020 was a turbulent year for UK and international businesses and employment law, but in spite of the many challenges, and with ever-evolving governmental policies and schemes to navigate, we have seen resilience and adaptability from our clients. With the delivery of a post Brexit EU-UK Trade & Cooperation Agreement on Christmas Eve, and other key decisions expected in 2021 – we set out below a timeline of the key changes expected for the year ahead, and how to best prepare for them.
Brexit – employment rights: Under the trade and co-operation agreement reached with the EU on 24 December, the UK must not weaken or reduce the level of employment rights in place as at 31 December (the end of the transition period) in a manner affecting trade or investment. This reflects the “level playing field” commitments designed to prevent either party seeking a competitive edge in various regulatory areas. In relation to existing EU derived domestic employment legislation, anything in effect on 31 December therefore continues to be effective. This is subject to the ability of the Court of Appeal and Supreme Court to deviate from existing ECJ decisions if it seems appropriate to do so. The UK is not however required to follow new EU employment rights, but the EU can take “rebalancing” measures if the UK diverges significantly from the EU in a way that materially impacts trade or investment.
Whilst it is not yet clear how it will be determined whether particular measures affect trade or investment, it is unlikely that we will see any large scale overhaul of employment law in the UK.
For more information on what the Brexit deal means for businesses, visit our Brexit hub for the latest insights.
Brexit – immigration: The EU-UK TCA is not a meaningful replacement of free movement. It is vastly limited compared to free movement and simply extends the business visitor category to include a few more permissible activities and creates short term work visas for certain experienced workers and intra company transfers. Read more for further information on the implications of the TCA on immigration here.
Government consultation - post termination non-compete clauses: In December 2020, BEIS opened a consultation on measures to reform post termination non-compete clauses. The consultation seeks views on proposals to require employers to continue paying compensation to employees for the duration of a post termination non-compete clause, requiring employers to confirm in writing to employees the exact terms of a non-compete clause before their employment commences, introducing a statutory limit on the length of non-compete clauses, or banning the use of post-termination non-compete clauses altogether. The consultation closed on 26 February.
Government consultation - ban on exclusivity clauses: In December 2020, BEIS opened a consultation on extending the ban on exclusivity clauses in employment contracts to prevent employers from contractually restricting low-paid workers (those earning less than £120 per week) from working elsewhere. The consultation closed on 26 February.
Publication of CJRS claims: On 1 February 2021 HMRC will start publishing details of employers’ Coronavirus Job Retention Scheme (CJRS) claims. The published information will include the employer name, an indication of the value of the claim within a banded range and the company number.
Gender pay gap reporting: The requirement to report on the gender pay gap was suspended last year in light of the pandemic. Reporting will go ahead this year, but the EHRC has confirmed that they won’t take enforcement action until October giving companies an extra 6 moths to comply. Those on furlough on the snapshot date should be excluded from the data. This may distort pay disparities in industries, such as retail and hospitality, where a large number of lower paid women have been furloughed.
Minimum wage: increases to the national minimum wage and national living wage come into effect on 6 April 2021. Age 23+: £8.91; age 21-22: £8.36; age 18-20: £6.56; age 16-17: £4.62; apprentice rate: £4.30.
Off-payroll workers/ IR35: There will be changes from 6 April 2021 to the off-payroll working rules. The changes represent a significant shift in the tax and compliance landscape for businesses that engage contractors through personal service companies (PSCs). Broadly, the changes mean that the burden of tax and compliance is shifted from the PSC/ off-payroll worker to the fee-payer or end user client organisation and are designed to catch disguised employment relationships through PSCs.
The rules apply to large and medium sized enterprises – “small” businesses are defined as where two or more of the following conditions are satisfied: the annual turnover is not more than £10.2 million; the balance sheet total is not more than £5.1 million; and the number of employees is not more than 50.
If caught by the changes, the end user client will need to make a tax status determination on their service providers. If the contractor is an employee for tax purposes, then the end user client becomes responsible for paying PAYE and national insurance contributions.
Coronavirus Job Retention Scheme (CJRS): this is currently due to end on 30 April 2021, but with the current lockdown lasting until at least mid-February, this may well be extended again. The Government’s Guidance on the CJRS is continually being updated, most recently to clarify that those with caring responsibilities (including as a result of school closures) are eligible for furlough, so it is important to keep checking the latest version. Please click here for our briefing on the CJRS.
In court: Holiday pay – series of deductions: In June 2021 the Supreme Court is due to hear an appeal against a Court of Appeal decision that a “series” of unlawful deductions from holiday pay would not be interrupted by gaps of more than three months (Chief Constable of Northern Ireland v Agnew).
In court: Holiday pay – overtime: In June 2021 the Supreme Court is due to hear an appeal against a decision of the Court of Appeal that holiday pay must include regular voluntary/ non-guaranteed overtime (Flowers v East of England Ambulance Trust).
In court: Holiday pay – part year workers: On 9 November 2021 the Supreme Court is due to hear an appeal against the Court of Appeal’s decision that an employment tribunal was wrong to find that “part-year” permanent workers should have their annual leave entitlement capped at 12.07% of annualised hours (Harper Trust v Brazel).
Flexible working: On 1 December 2021 the government's consultation “Making flexible working the default” closes. It proposes various reforms including making the right to request a “day one” right, and consults on whether changes need to be made to the 8 business reasons for refusal and whether the employer should be required to suggest alternatives instead of rejecting a request outright.
EU Whistleblowing Directive: EU member states are obliged to bring in measures to comply with the EU Whistleblowing Directive by 17 December 2021. Following Brexit, the UK do not need to take any steps, but employers with operations in the EU will need to ensure they are complying with the legislation introduced in the various EU jurisdictions.
The new provisions apply to organisations with 50+ workers. The EU has allowed member states longer to comply where organisations have between 50 and 249 workers, but these organisations must be brought within the regime by 17 December 2023.
Dates as yet unknown:
In court: worker status: In July 2020 the Supreme Court heard an appeal against the Court of Appeal finding that Uber drivers are workers for the purposes of employment protection rights. We are still awaiting the court’s judgment (Uber v Aslam).
In court: working time: In February 2020 the Supreme Court had to consider whether employees, who sleep in to enable them to carry out duties if required, engage in working time for the full duration of the night shift. The Court of Appeal had previously found in this case that the claimants were only entitled to the national minimum wage when actually awake for the purposes of working. The implications of this judgement will be far reaching (Royal Mencap Society v Tomlinson-Blake).
Ethnicity pay gap reporting: In 2018 the government consulted on the introduction of mandatory ethnicity pay gap reporting. In December 2020 a BBC report indicated that the response to consultation showed a strong support for the introduction of reporting for those with over 250 staff. It is anticipated that reporting will be introduced, but the timeframe is uncertain.
In the Queen’s speech back in December 2019 the Government announced it was planning a new Employment Bill. Clearly the pandemic delayed its implementation and there is currently no current indication of when these measures will be introduced, but it is anticipated that the Bill will bring in the following measures:
- A single enforcement body – a single labour market enforcement agency is proposed to better ensure that vulnerable workers are aware of and can exercise their rights.
- Tips to go to workers in full – the government proposes to ensure employers pass on all tips and service charges to workers and that they are distributed on a fair and transparent basis.
- The right to request a more predictable contract – the government proposes to introduce the right for all workers to request a more predictable and stable contract after 26 weeks’ service.
- Pregnancy and maternity discrimination – the government intends to extend the period of redundancy protection from the point an employee notifies their employer of their pregnancy until six months after the end of their maternity leave.
- Leave for neonatal care – the government is considering a new right to neonatal leave and pay to support parents of premature or sick babies.
- A week’s leave for unpaid carers – this will potentially provide additional support for unpaid carers.
- Flexible working – the government is proposing to make flexible working the default position unless the employer has a good reason.
For more information, please contact Trevor Bettany.
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