Employment Law Changes in 2021: Make Sure Your Business is Compliant

As Lockdown eases and businesses prepare to embrace a new era in working practices.  It's an opportunity to embrace a new flexible, mobile, and technological business environment.

Businesses are now looking to the future. Some eagerly, and some, perhaps anxiously, anticipating the impact of the COVID pandemic and the changes that are coming to employment law this year.

Here is a glimpse is some things that have already been implemented and those to be expected from April 2021.

  • 1 January 2021 - New Immigration Law in Force: - On this date, a new immigration system that applies equality to EU and non-EU citizens came into effect. There are several changes to the former points-based system, including:

    • Replacement of the Tier 2 General category with a skilled worker route (requires a job offer in an eligible skilled occupation from an approved sponsoring employer)

    • Abolition of maximum six-year stay for workers in this category

    • Gross basic salary must be a minimum of £25,600

    • Skill level must be equivalent to A-Levels

    • Applicants must have a intermediate-level ability to communicate in English

EU workers already resident in the UK on 1 December 2020 have until 31 June 2021 to apply for settled status enabling them to remain here.

  • 12 February 2021 - Public Sector Exit Payment Cap Revoked: On 21 July 2020, the Government confirmed its intention to change the law so that exit payments to public servants in excess of £95,000 could be clawed back if the employee moved into another highly pad public sector job. Consultations on the reform began in 2015 and culminated in a final consultation in September 2020. The Restrictions of Public Sector Exit Payments Regulations 2020 were made on 14 October 2020 and cam into force on 4 November 2020.

  • On 12 February 2021: The regulations were revoked on the grounds that a review had indicated unintended consequences arising from them. The Government has issued guidance to employers on paying additional sums to employees whose exit payments were capped between 4 November 2020 and 12 February 2021.

  • 30 March 2021- Gender Pay Gap Reports (Public Sector): Specified public authorities, including Government departments, the armed forces, local authorities, the NHS and state schools, with 250 or more employees, are required to publish their gender pay gap reports annually by this date, based on data gathered on 31 March each year.  

    • COVID-19: The Government announced a suspension of enforcement measures on gender pay gap reporting for 2019/20, in view of the unprecedented pressures on businesses caused by the pandemic. Employers have until 5 October 2021 to report their 2020/21 figures before enforcement measures are taken but are encouraged to report by the usual reporting deadlines.

  • 4 April 2021 - Gender Pay Gap Reports (Private and Voluntary Sectors): Private and voluntary Sector employers in England, Wales and Scotland with at least 250 employees are required to publish information about differences in pay and bonuses between men and women in their workforce, based on a 'snapshot' date of 5 April each year. Provision are not yet in force in Northern Ireland.

    • COVID-19: The Government announced a suspension of enforcement measures on gender pay gap reporting for 2019/20, in view of the unprecedented pressures on businesses caused by the pandemic. Employers have until 5 October 2021 to report their 2020/21 figures before enforcement measures are taken but are encouraged to report by the usual reporting deadlines.

  • From 6 April 2021 - Extension of IR35 to the Private Sector: From 6 April 2021, deciding whether IR35 applies becomes the responsibility of all private sector employers that n a tax year have:

    • More than 50 employees​

    • An annual turnover over £10.2 million

    • A balance sheet worth over £5.1 million

COVID-19: The extension of the rules to the private sector was due to take effect from 6 April 2020 but was delayed due to the pandemic. HMRC has published guidance on the new rules, Prepare for changes to the off-payroll working rules (IR35), a statement on the outcome of its consultation, off-payroll working rules from April 2021.

  • No date - Extending Pregnancy Protection from Redundancy: An employee at risk of redundancy while on maternity , adoption, or shared parental leave has the right to be offered any suitable alternative vacancy that is available.​

The Government is proposing to extend this protection to:

  • Pregnant employees, once they have told their employer of their pregnancy

  • Employees returning from maternity or adoption leave within the previous six months

  • Parents returning from shared parental leave (although how the limits on this right will operate is still to be worked out).

The proposals are in response to a consultation earlier in the year on pregnancy and maternity discrimination. The Government has said that legislation will be brought forward when Parliamentary time allows.

  • Expected 2023 - Neonatal Leave and Pay: The Good Work Plan contained a commitment to introduce extra statutory leave and pay for all parents of premature babies needing specialist care in a neonatal unit. In March 2020, the Government confirmed its intention to introduce 12 weeks' paid leave for parents in this position to avoid them having to choose between returning to work and taking care of their new-born baby. Announcements prior to the budget indicated the premature baby leave would be in addition to existing maternity and paternity pay provisions. Although details on how it will work are yet to be released, the leave is expected to be taken after maternity/paternity leave, in blocks of one or more weeks, and paid at the statutory rate for those employees with 26 weeks' service.

  • There was also a Budget 2020 commitment to consult on a new 'in-work entitlement' for employees with unpaid caring responsibilities, such as for a family member or a dependent.

Statutory rates and Compensation Limits: -

  • Maximum guarantee payments:

    • From 6 April 2020: £30 a day  (maximum £150, five days in any three-month period)

    • From 6 April 2021: £30 a day  (maximum £150, five days in any three-month period)

  • Maximum week's pay for calculating redundancy and unfair dismissal basic award:

    • From 6 April 2020: £538

    • From 6 April 2021: £544 

  • Maximum basic award for unfair dismissal and statutory redundancy payment:

    • From 6 April 2020: £16,140  (30 weeks' pay subject to the limit on a week's pay)

    • From 6 April 2021: £16,320  (30 weeks' pay subject to the limit on a week's pay)  

  • Minimum basic award for dismissal on trade union, health and safety, occupational pension scheme trustee, employee representative and on working time grounds only:

    • From 6 April 2020: £6,562

    • From 6 April 2021: £6,634

  • Maximum compensatory award for unfair dismissal (unlimited for certain automatically unfair dismissals, for example, health and safety or whistleblowing):

    • From 6 April 2020: £88,519

    • From 6 April 2021: £89,493 

  • Additional award for failure to comply with reinstatement or re-engagement order:

    • From 6 April 2020: £13,988 - £27,976  (26-52 weeks' pay maximum)

    • From 6 April 2021: £14,144 - £28,288  (26-52 weeks' pay maximum)

  • Minimum compensation for employees excluded/expelled from trade union:

    • From 6 April 2020: £10,022

    • From 6 April 2021: £10,132

  • Failure to allow right to be accompanied correctly:

    • From 6 April 2020: £1,076  (two weeks' pay capped at the statutory amount)

    • From 6 April 2021: £1,088  (two weeks' pay capped at the statutory amount)

  • Failure to give written statement of particulars:

    • From 6 April 2020: £1,076 or £2,152  (two or four weeks' pay capped at the statutory amount)

    • From 6 April 2021: £1,088 or £2,176  (two or four weeks' pay capped at the statutory amount)

  • Flexible working regulations:

    • From 6 April 2020: £4,304  (eight weeks' pay capped at the statutory amount)

    • From 6 April 2021: £4,352  (eight weeks’ pay capped at the statutory amount)

    • For more details, see The Employment Rights (Increase of Limits) Order 2021

Family friendly payments: -

Compensation limits

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  • Statutory maternity pay (SMP):

    • First six weeks – 90 per cent of employee’s average weekly earnings. Remaining weeks at the following rates.

    • From 5 April 2020: £151.20 or 90 per cent of employee’s weekly earnings if this is lower.

    • From 4 April 2021: £151.97 or 90 per cent of employee’s weekly earnings if this is lower.

  • Statutory adoption pay (SAP):

    • First six weeks – 90 per cent of employee’s average weekly earnings. Remaining weeks at the following rates.

    • From 5 April 2020: £151.20 or 90 per cent of employee’s weekly earnings if this is lower.

    • From 4 April 2021: £151.97 or 90 per cent of employee’s weekly earnings if this is lower.

  • Statutory paternity pay (SPP):

    • Paid for two weeks.

    • From 5 April 2020: £151.20 or 90 per cent of employee’s weekly earnings if this is lower.

    • From 4 April 2021: £151.97 or 90 per cent of employee’s weekly earnings if this is lower.

  • Statutory shared parental leave pay:

    • From 5 April 2020: £151.20 or 90 per cent of employee’s weekly earnings if this is lower.

    • From 4 April 2020: £151.97 or 90 per cent of employee’s weekly earnings if this is lower.

  • Statutory Sick Pay:

    • From 6 April 2020:​ £95.85

    • From 5 April 2021: £96.35

Chancellor Rishi Sunak announced on November 2020 that from April 2021, the National Living Wage would rise to £8.91 an hour (an increase of 2.2%) and be extended to 23 and 24 year olds for the first time (previously the NLW applied only to 25 year olds and older). All other NMW rates will increase at the same time in line with Low Pay Commission recommendations.

  • National Living Wage and National Minimum Wage: - From 1 April 2021:

    • Workers aged 23 and over: £8.91 an hour (National Living Wage)

    • Workers aged 21-22: £8.36 an hour

    • Development rate for workers aged 18-20: £6.56 an hour

    • Young workers rate for workers aged 16-17: £4.62 an hour

    • Apprentice rate: £4.30 an hour

  • Income TAX Allowances 2021/22: For England and Northern Ireland

    • Employee Personal Allowance ​

      • £242 per week​

      • £1,048 per month

      • £12,570 per year

    • 20% on annual earnings above PAYE TAX threshold and up to £37,500

    • 40% on annual earnings from £37,501up to £150,000

    • 45% on annual earnings above £150,000

  • Businesses should review their employee handbooks to ensure their policies and procedures are up-to-date and reflect the current changes.  All employees should be informed of these changes and how they impact on their Terms and Conditions of employment. If you require any support or guidance, we are only a phone call away.