Below are summarised the new employment laws which have come into law between 1 January and 6 April 2021, summarising the important changes and what these mean for employers.
Covid-19 latest financial support for business
We kick off with the Government Covid-19 support measures for business; restart grants, loans and financial support, just below.
This article does not cover the Covid specific laws for the CJRS furlough scheme. Furlough ended on 30th September 2021. For what employers need to know regarding end of furlough, read our latest article, Furlough ends, what next? considerations for employers.
The latest laws and safe workplace guidance relating to Covid-19 are summarised here and include the latest on the Government’s winter plan (A and B): Covid -19 Planning for Employers – a guide to workforce planning in a Covid 19 world.
Restart grants, loans and spring Budget financial support for business
From April 2021, the Government has announced the following additional support to businesses in England.
- One off ‘re-start’ grant of up to:
– £6,000 per premises for non-essential retail businesses, and
– £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
Grants will be available from 1 April 2021, via your local council. See check if you’re eligible for a coronavirus restart grant
- Recovery Loan Scheme
From 6 April 2021, accredited lenders will be open to all UK businesses to access loans of between £25,000 and £10 million and asset and invoice finance between £1,000 and £10 million with 80% guaranteed by the Government. See www.gov.uk/guidance/recovery loan scheme.
The Government has published all the help available to businesses and the self employed, in this online help finder find coronavirus financial support for your business.
- Spring 2021 Budget support for Business
At last – there was a Budget. There is a lot to unpack in the Budget and it’s well worth reading this helpful summary: what you need to know – Budget 2021.
This sets out all Budget support for business due to the Covid pandemic, and the new super-deduction against corporation tax. From April 2021, this super deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
The Chancellor also announced that we are all going to be paying for Covid via frozen tax allowances and an increase in the corporation tax to 25%, delayed to start in April 2023. Significantly, a new system of tapered relief will be introduced at the same time, to link the rate of corporation tax suffered to the amount of annual profits generated. The current 19% rate will apply to companies with profits of £50,000 or below, and different levels of tax will apply to annual profits between £50,000 and £250,000.
- Free rapid lateral flow coronavirus tests for your employees
In a major push for the Government’s workplace testing programme, all employers will now be able to offer their employees free, rapid and regular testing that can be taken at home. If you have 10 or more employees, from early April you’ll be able to order tests for your employees to collect from their workplace and use at home twice a week. You can do this if you cannot provide testing in the workplace.
Employers must register by 11:59 pm on Monday 12 April 2021 in order to access the free rapid flow tests. Tests are free until the 30th June. If your business is closed or you cannot provide tests now, you should still register so you can order tests in the future.
You can order tests if:
– your business is registered in England
– your employees cannot work from home.
Businesses in England with less than 10 Employees, and employees themselves can get rapid lateral flow test from a local test site, if they have no symptoms. As well as reporting their result directly to the NHS, employees should advise their employer of a positive result and take a confirmatory PCR test. Employers will retain an important role in encouraging employees to take and report the results of their test.
New employment laws for 2021
1. HMRC off payroll working rules enhancing IR35 – from 6 April 2021
From 6th April this year, HMRC is tightening the net around Off-Payroll rules and IR35. These were previously postponed from April 2020. The purpose of the Off-Payroll working regime and the IR35 rules is to prevent the avoidance or reduction of tax (PAYE) and National insurance contributions (NICs)
This can happen where there is an intermediary between a client (who is paying the fees/wages) and a worker. The intermediary is often called a personal service company (PSC) and hires the worker. Under the previous IR35 rules, the PSC deducts PAYE and employer and employee NICs before paying the worker.
The Off-Payroll rules apply to large and medium ‘client’ businesses who hire workers via any type of intermediary, to supply services in the UK. These clients have to conduct a ‘status determination’ to decide whether the worker is in fact their employee, and the client who is the deemed employer, rather than the intermediary).
In determining employment status, clients need to assess:
– how much control the client has over the worker’s role or
– the extend to which the client measures and manages the worker’s performance
HMRC’s online Check Employment Status for Tax (CEST) tool https://www.gov.uk/guidance/check-employment-status-for-tax is a quick check for Clients- and workers themselves -to find out if a worker on a specific engagement should be classed as employed or self-employed for tax purposes
End-clients who are small companies are excluded from these new rules. A client is deemed small for these purposes if it satisfies two or more of the following requirements, according to its last set of accounts filed before the tax year when fees are paid to a PSC:
- Its annual turnover is not more than £10.2 million.
- Its balance sheet total is not more than £5.1 million.
- It has not more than 50 employees.
In practice last year many large and medium clients stopped hiring workers through a PSC as they did not want to take the risk. Accordingly in certain sectors already there are many less workers supplying services via PSCs and the workers have been hired directly by the end-client as an employee with PAYE and NI deducted from fees payable to workers.
2. Health & Safety: Protection from detriment extended to workers – from 31 May 2021
From 31 May 2021, an amendment to section 44 of the Employment Rights Act 1996 will come into force, extending to workers the protection against any detriment if they take certain action or steps in respect of health and safety concerns: such as refusing to return to the workplace because of concerns regarding Covid-19. Before this date, this protection was only afforded to employees.
The extension of this protection to workers will open the door to more claims of this sort. Bear this in mind when considering taking action against workers who refuse to attend the workplace due to concerns regarding Covid. Recap on the Health & Safety obligations of employers in our article: Covid-19 Planning for Employers: Health & Safety obligations of employers.
3. Changes to Covid-19 guidance for clinically extremely vulnerable workers – from 1 April 2021
In line with the Government’s Covid-19 Response – Spring 2021, From 1 April 2021, individuals who are clinically extremely vulnerable are no longer required to shield, and so will no longer be eligible for statutory sick pay or Employment and Support Allowance on the basis of being asked to shield.
From this date, the advice is that extremely vulnerable people, as with everyone else, should continue to work from home, where possible. If working from home is not possible, take steps to reduce the risk of transmission in the workplace of course, or alternatively consider whether those individuals might be eligible for furlough.
Based on ONS survey figures of the week ending 27th February 2021, almost all, 94%, of clinically extremely vulnerable people reported that they had received at least one dose of the COVID-19 vaccine and 4% had reportedly received both doses. Nevertheless, advice from CMO for Engand Dr Jenny Harries is “if you have been shielding, we strongly urge you to take extra precautions following 1 April to keep as safe as possible, such as continuing to observe social distancing and working from home”.
4. Business Immigration: a new UK immigration system – from 1 Jan 2021
The Brexit transition period ended on 31st December 2020, meaning the end of free movement of people between the EU and the UK, and the introduction of a new, points based immigration system for the UK from 1st Jan 2021.
The new system applies equally to EU and Non EU citizens. It ends the availability of low wage labour from EU (excluding Ireland), and it lowers the bar to entry for Non EU citizens. All this represents a major change for employers, and sectors, who have been heavily reliant on EU workers. The immediate priority if you are in this group is to apply for a UK Visa Sponsorship Licence to de risk your business against a potential drop off in EU candidates.
Our explainer article brings you up to speed on the main changes to the UK immigration system, introduces the new Skilled Worker visa, and explains how the points based system works. We have linked to all the relevant updated gov.uk pages. As there will be further changes in time, to make it simpler for SMEs to hire workers for example, keep an eye on the links and bookmark the article.
Another priority is ensure that all EU, EEA and Swiss nationals on your teams have applied for settled status in the UK under the European Settlement Scheme. The European Settlement Scheme allows EU, EEA and Swiss nationals and their families to continue to live, work and study in the UK beyond June 30th 2021. The deadline for applying to the European Settlement Scheme is 30th June 2021:how apply to the European Settlement Scheme.
There are very detailed requirements under the new points based immigration system which need to be carefully considered. A sponsored role will usually need to pay a minimum of £25,600 a year, unless the market rate for that role is higher than this, in which case the market rate needs to be paid.
There are special conditions for some categories of workers. For example, the £25,600 salary threshold is lowered for those in shortage occupations on the The UK wide Shortage Occupation List (SOL). These include scientists, engineers, medical and healthcare workers. The Government carries out frequent reviews of the SOLs.
Latest Changes to UK immigration system rules – from 6 April 2021
In March 2021 the Government published a statement of changes to the Immigration Rules which comes into force on 6th April. The statement includes revisions to the SOL, including the addition of eight occupations in the health and care sector as well as modern language teachers, following MAC (Migration Advisory Committee’s) recommendations published in September 2020. Sector trade groups and federations, such as the construction and hospitality trade bodies, lobby to have roles included in the SOL. The agriculture sector at the moment appears to be the one sector that will be allowed to recruit unskilled workers.
The statement of changes from 6th April 2021 also include a new minimum hourly rate of pay of £10.10 for sponsored employees working under the skilled worker visa category. Employers must calculate the hourly rate of pay for their sponsored employees, even if the annual minimum salary requirement of £25,800 is net.
The statement of changes also formalises the introduction of the new Graduate route, which opens on 1st July 2021, allowing students to stay and work in the UK, or to look for work, at any skill level for up to two years after they successfully complete a course at a UK higher education provider (three years for those awarded doctorates).
Take up of the European Settlement Scheme has been significant. At the end of January 2021, according to its figures, the Home Office had received 5 million applications to the scheme. More than 2.4 million of those have been granted settled status, allowing them permanent leave to remain. Another 2 million have been granted settled status. This number includes adults, children and those who are retired. Covid-19 restrictions of course may be a factor in the numbers choosing to settle in the UK. But in the light of these figures, so far pre-Brexit worries over a mass exodus of EU, EEA and Swiss nationals from the UK do seem unfounded.
5. Changes to National Living Wage, National Minimum Wage rates and bands – from 1 April 2021
On 25 November 2020, the government accepted in full the Low Pay Commission’s proposed increases to the national living wage and national minimum wage rates which came into effect on 1 April 2021.
From 1st April 2021, the National and Living wage rates will be increased, and the National Living Wage will now apply to those aged 23 and over. Before 1st April 2021, the National Living Wage only applied to those aged 25 and over.
23-24 yr old workers who were paid the old National Minimum Wage rate for their age band of £8.20 per hour in 2020, will see their pay leap by 8.7% in 2021.
Apprentices are entitled to the apprentice rate if they’re either:
- under 19 or
- aged 19 or over and in the first year of their apprenticeship.
So an apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.30.
Apprentices are entitled to the minimum wage for their age if they :
- are aged 19 or over AND
- have completed the first year of their apprenticeship.
So an apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £8.36.
You can use the minimum wage calculator to check whether the National Living Wage or National Minimum Wage is being paid.
6. Increases in statutory sick pay and pay for family related leave – from
4 April 2021
From 4th April 2021, the weekly rates of statutory maternity pay, paternity pay, adoption pay, shared parental pay and parental bereavement pay increase from £151.20 to £151.97.
7. Increase to Tribunal compensation limits and statutory redundancy payments -from 6 April 2021
Compensation limits for certain tribunal awards and other statutory payments will increase:
- The maximum amount of a week’s pay (used for calculating a redundancy payment or for various awards including unfair dismissal basic award) increases from £538 to £544. These new rates apply to terminations or redundancies on or after 6 April 2021.
- Maximum compensatory award for unfair dismissal increases from 388,519 to £89,493
7. Changes to the formula for post-employment notice pay (PNEP) – from 6 April 2021
From 6 April 2021, a change in the way employers must calculate post-employment notice pay (PNEP) comes into force. PNEP is the part of a termination payment that covers an employee’s notice period (the employee’s notice pay, where they are not working their notice). It is subject to income tax and employee’s and employer’s National Insurance contributions. The aim of the amendments is to avoid unfair outcomes if an employee’s pay period is defined in months, but the contractual notice period is expressed in weeks.
This will impact any employers who are calculating termination payments made under settlement agreements, who should ensure that PENP is calculated correctly in order to avoid any unintended tax liability.
8. Gig economy and workers’ rights: Uber case ruling- effective from 19th February 2021
On 19 February 2021 in a judgment that has far reaching consequences for all employers, the Supreme Court unanimously upheld the original Employment Tribunal’s decision that Uber drivers were workers for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998.
The Supreme Court ruled that a company’s actual day-to-day level of control over its staff, and levels of performance management it holds them to, ultimately determine their employment status, rather than what is stated in the contract. Employers will need to reconsider carefully whether their freelancers and contractors are genuinely self employed, or merely disguised workers, in the light of the latest ruling. Employers will need to update their employment contracts if they have terms which in practice do not reflect what is happening ‘on the ground’, and/or which seek to deny workers their basic statutory rights, for example National Minimum Wages, holiday pay and pensions.
Read our full article on the Uber ruling and what it means for you, Gig economy and Workers’ rights: latest updates and implications for employers.
Uber had already begun paying drivers the National Minimum Wage rate, holiday pay and pension payments. The case now returns to the Employment Tribunal to determine the compensation due to Uber drivers in respect of their claims for backdated holiday pay and unlawful deductions from wages.
A reminder of the new employment laws for last year 2020
A quick two-bullett reminder of the main new employment laws that came into force in 2020, is below, as things were travelling very fast last year. Just because the UK was entering the first Covid-19 lockdown, these laws still apply. Do check back and make you sure you have these covered. Our article carries a more detailed recap on the new employment laws for last year, 2020.
- From 6th April 2020 onwards, Employers are legally obliged to issue all new employees and workers a written statement of employment particulars (often called a ‘section 1 statement’) from day 1 in the role. The duty is being extended to all Workers, not just Employees. Employers must provide additional information, details are outlined in the article.
- There are other changes related to calculating holiday pay, agency worker rights and new Parental Leave regulations.
Covid-19 planning for employers: managing the workforce in Covid-19 world
Finally, for updated help on the Covid-19 rules, regulations for businesses and guidance for employers as we move through stage 3, stage 4 and to the lifting of restrictions, hopefully, on 21st June 2021, please head over to our updated article: Covid-19 planning for employers: managing the workforce in a Covid-19 world.
If you want to talk to rough your plans or need specific advice related to the effect of Covid-19 on your business or workforce planning, please get in touch, details are below.
If you need advice on the employment law updates for 2021, and how they affect your business, please get in touch.