Employment law: what to expect in 2021 and beyond

As we enter the final months of the year, Liz Stevens of Birketts LLP highlights what employment law changes we can expect in 2021 and beyond.

Employment Law Changes 2021

What employment law changes will there be in 2021?

The events of 2020 and the devastating impact of the COVID-19 pandemic has meant that many of this year’s anticipated employment law changes have been delayed or postponed. With the hope that 2021 will see the beginning of the end of the pandemic, it is likely that legislative developments will start to progress further.

In this article we look at some of the confirmed and proposed developments in employment law that businesses need to be aware of, due to take effect in 2021 and beyond.

1. Coronavirus Job Retention Scheme

While the Coronavirus Job Retention Scheme (CJRS) was meant to end on 30 April 2021, it has now been extended until 30 September 2021. The CJRS will continue for all UK nations, meaning that the Job Support Scheme (JSS), which was meant to begin on 1 November, has been postponed.

The government has reverted to the original structure of the CJRS, with some slight differences:

employers will be able to place their staff on furlough and claim 80% of their salary up to a cap of £2,500 per month per employee
the difference is that employers will be asked to contribute National Insurance and Pensions contributions whilst they claim under the CJRS
flexible furlough is also being extended so employees can work some hours and have their unworked hours covered by the grant

For periods ending on or before 30 April 2021, you can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.

For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods from starting on or after 1 May 2021.

2. Off-payroll rules for the private sector (IR35)

Originally due to take effect from 6 April 2020 but delayed to 6 April 2021, changes to IR35 rules will affect medium and large businesses within the private sector that use individual contractors. These changes will largely mirror changes that took effect in the public sector in 2017 but small businesses will not be affected. To be eligible, an organisation must meet at least two of the below criteria:

have over 50 employees
have a net turnover in excess of £10.2m
have over £5.1m on their balance sheet

The IR35 rules apply where an individual (worker) personally performs services for another person (client), through an intermediary, usually a personal service company (PSC). If the services were provided under a direct contract, the worker would be regarded for tax purposes as being employed by the client. This is known as deemed employment.

At present, in the private sector it is the intermediary's responsibility to determine whether there is deemed employment and IR35 applies. Under the new regime, for any services provided by an individual on or after 6 April 2021, the onus will shift from the PSC to the end user client to make a status determination. Responsibility for accounting for tax and national insurance will shift to the party which pays for the individual's services, known as the fee-payer.

In anticipation of these changes, it is essential that medium and large businesses carry out an assessment to determine whether the new rules under IR35 apply to their independent contractors and review their contracts and pay arrangements.

3. Employment Bill

A new Employment Bill was announced in the December 2019 Queen’s Speech, and whilst this has not yet appeared in 2020, it is expected to be published in 2021. The measures expected to be included in the Bill are wide-ranging, and several originate out of the government’s 2018 Good work plan.

The Employment Bill is likely to include the following measures:

The introduction of a single labour market enforcement body to ensure that vulnerable workers are better informed of their rights, and to support businesses in compliance. The remit of the new body formed the basis for a 2019 consultation, for which the government response is still awaited.
Payment of all tips and service charges go to workers, with the distribution of these sums supported by a statutory Code of Practice.
A new right to request a more predictable and stable contract after 26 weeks’ service, aimed at those engaged under contracts with variable and unpredictable hours, such as zero-hours employees. This was the subject of a 2019 consultation, for which the government response has not yet been published.
Extending redundancy protection to cover pregnant employees from the date they notify the employer of their pregnancy and for a period of six months after the end of their pregnancy, in addition to the current protection that applies during maternity leave. This was also the subject of a 2019 consultation.
Extended leave for parents of children in neonatal care (see below).
A new right to a week’s (unpaid) leave for employed carers (see below).

4. Neonatal leave and pay

In March 2020, the government published its response to a 2019 consultation on proposals to introduce a new right to neonatal leave and pay.

The response confirmed that the government intends to bring forward legislation under the proposed Employment Bill to implement a new right for parents to take an additional week of leave for every week their baby is in neonatal care, up to a maximum of 12 weeks. It is likely that the leave will have to be taken in a continuous block of one or more weeks.

The leave will be added on to the end of the parent’s period of maternity or paternity leave and will be available to all employees. Those with a minimum qualifying period of 26 weeks’ service and who earn above the minimum pay threshold will be entitled to receive pay for the neonatal leave period at the current statutory rate.

There is currently no confirmed date for this new right to be implemented, although it is unlikely that it will be implemented before the end of 2021.

5. Carer’s leave

The government issued a consultation in March 2020 on proposals to introduce a new right for employees with caring responsibilities to take a week’s unpaid leave per year.

The consultation sought views on who should be eligible for the leave, the purpose of the leave and applicable notification requirements.

The consultation closed in August 2020 and the government’s response is not yet available. There is no confirmed timescale for the new right to be introduced, but it is likely to be included in the government’s anticipated Employment Bill.

Liz Stevens Birketts