Employment law: Seven key tasks for HR in 2021

2020 was the year that HR was required to react to the unexpected, but it’s now time to plan for the known challenges in the coming year. We look at what HR can do to prepare for 2021.

1. Be ready for the new immigration system

The end of the Brexit transition period means that there will be a new points-based immigration system in place from 1 January 2021. EEA nationals arriving in the UK from 1 January will need to comply with the same visa requirements as other non-UK nationals.

Employers should understand how the new system will affect their recruitment and should consider whether they will need to apply for a sponsor licence.

They should encourage their existing EEA employees to apply for settled or pre-settled status, if they have not already done so.

European nationals already in the UK before the end of the transition period have a grace period until 30 June 2021 to apply under the settlement scheme. Employers will need to understand the rules on right to work checks during this period.

• Recruiting foreign nationals
• Employment law manual: Employing foreign nationals
• How to prepare for the end of the Brexit transition period
• How to apply for a sponsor licence

2. Review your contracts for IR35 in the private sector

Reforms to the IR35 rules on off-payroll working in the private sector come into force on 6 April 2021, having been delayed by a year due to the coronavirus crisis. The rules are aimed at reducing tax avoidance for contractors employed via personal service companies.

Under the new rules, the organisation engaging the contractor is responsible for determining their employment status and assessing whether or not IR35 applies. If it does, the organisation that pays the individual’s fees is deemed to be their employer for tax and national insurance purposes.

Employers should review their contracts and put in place the necessary procedures to ensure compliance.

• IR35
• Employment law manual: Pay As You Earn
• IR35: Seven things private-sector HR needs to do now

3. Prepare for changes to the national minimum wage

The new national minimum wage rates to apply from 1 April 2021 have not yet been announced, but it is likely that the increase will be significantly less than in previous years due to the economic impact of the coronavirus crisis.

The age from which employees are entitled to the national living wage (the highest rate) is due to reduce from 25 to 23 from 1 April 2021 (although it is possible that this could be postponed).

Employers should look out for announcements on the new rates and the extension of the national living wage to 23-year-olds and be ready to comply with the new rules.

• National minimum wage
• Employment law manual: The national minimum wage
• Quick reference: National minimum wage

4. Plan for changes to the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme, which was due to close at the end of October 2020, has been extended until 31 March 2021. Employers can furlough employees from November 2020 even if they had not previously made use of the scheme. The scheme will cover 80% of furloughed employees’ wages (capped at £2,500 per month) until 31 January 2021.

The government will review the terms of the scheme in January and decide if employers should be required to contribute a proportion of employees’ wages.

Employers will need to assess how any changes to the scheme will impact their business and plan how to respond when the scheme comes to an end.

• Coronavirus Job Retention Scheme
• Employment law manual: Coronavirus Job Retention Scheme

5. Comply with any new rules on publishing modern slavery statements

The government has committed to making changes to the rules on publishing modern slavery and human trafficking statements.

It will be mandatory for organisations to report on certain areas when publishing their statement. They will be required to publish their reports on a government-run reporting service and there will be a single reporting deadline.

The duty to publish a statement will be extended to public-sector bodies with a budget of £36m or more.

It is not yet known when the new rules will come into force. The Government has said that it will publish guidance before the end of 2020, including on best practice approaches to reporting.

• Modern slavery
• Modern slavery and human trafficking statement

6. Be aware that redundancy protection for pregnant employees and new parents may be extended

The government consulted in 2019 on extending redundancy protection (ie the right to be offered suitable alternative employment) for employees taking maternity leave and for other new parents. It committed to extending the period of protection so that it would apply from the point the employee informs their employer that they are pregnant and continue for six months after their return to work.

There would also be extensions to the protection periods for employees taking adoption leave and shared parental leave.

An Employment Bill was announced in the December 2019 Queen’s Speech, to include measures to extend redundancy protection to prevent pregnancy and maternity discrimination. However, no date has yet been set for these changes to be brought into force.

• Alternative employment for redundant employees
• Enhanced redundancy protection for pregnant employees and new parents: Overview for employers

7. Look out for other changes on the horizon

Other employment law developments that the government has previously announced but not yet set out a timetable for include:

• further reforms to exit pay in the public sector;
• measures to ensure that tips left for workers go to them in full;
• a new right for all workers to request a more predictable contract; and
• an increase to the length of time required for continuity of employment to be broken.