Welcome to the March issue of our newsletter. we hope you will find the information in this letter both interesting and informative. If there are any specific HR related subjects you would like us to cover in future editions, please do not hesitate to let us know.
Acorn HR Services have decided to launch this newsletter on a monthly basis, to keep businesses up-to-date with the latest news that could potentially impact on how businesses work.
We hope that 2021 will be better for employers than 2020. One thing that remains certain is that this period remains a key time for development of employment law.
FURLOUGH SCHEME EXTENDED
With the budget on Wednesday 03 March 2021, the Chancellor of the Exchequer announced the extension of the Furlough Scheme.
Employers can now utilise this scheme until the end of September 2021 to support their businesses and reducing the need to make redundancies, if COVID has impacted on operational requirements.
Prepare for changes to Minimum Wage and Other Statutory Rates
The Government has confirmed that minimum wage rates, including the National Living Wage, are still to increase from 1st April 2021 despite the coronavirus pandemic. Additionally, the National Living Wage, currently paid to those aged 25 and over, is to be expanded to include those aged 23 and over.
New immigration laws
From 1st January 2021, the free movement of persons ended, meaning individuals from the EU will no longer have the automatic right to live and work in the UK. Instead, a whole new set of immigration laws are to be introduced. There will be a new points-based immigration system in place from 1st January 2021. EEA nationals arriving in the UK from 1st January will need to comply with the same visa requirements as other non-UK nationals.
All foreign nationals will now need to seek to enter the UK in the same way, and there will be a number of methods in which they can seek to do this. However, the majority are expected to use the new “Skilled Worker Route”. To be able to work in the UK legally under the “Skilled Worker Route”, foreign nationals have to meet specified criteria in order to earn at least 70 points. Crucially, this involves being offered a job from an approved sponsor. Employers will need to make sure the sponsor licence is in place in good time (licence applications can take about 6 weeks to process).
Employers should understand how the new system will affect their recruitment, and should consider whether they will need to apply for a sponsor licence. We suspect most of our clients will not do this.
They should encourage (or continue to do so) their existing EEA employees to apply for settled or pre-settled status. Such people already in the UK before the end of the transition period have a grace period until 30th June 2021 to apply under the settlement scheme. Employers also need to understand the rules on right to work checks during this period. They are slightly different than those checks which started back in 2008.
Gender pay gap reporting – again (for some)
HR and payroll teams working within large employers had a reprieve from crunching their gender pay gap numbers in 2020, after the Government paused publication in the light of the Covid-19 pandemic. We understand that reporting is back on the agenda in 2021, with a deadline for private sector employers of 4th April 2021.
There are some unanswered questions about what needs to be reported. It is not yet clear whether employers will have to report the missing 2019/20 figures at the same time as their 2020/21 figures. It is also unclear whether staff who were on furlough on the snapshot date of 5th April 2020 should be included in the 2020/21 figures. And, if they are to be included, is their pay their normal rate of pay or the reduced furlough rate of pay? To tackle this, those employers should clearly outline in the accompanying narrative why the figures present the data that they do. Watch out for further guidance from the Government and be ready to adjust calculations.
Organisations outside of the gender pay gap reporting regime will escape these issues for now – but there are plans to reduce the reporting threshold to employers with 100 or more employees. The Equal Pay Bill 2019/21 is on its way through Parliament, and aims to reduce the threshold for gender pay reporting and bring in ethnicity pay reporting for employers at the same threshold. Although these changes are unlikely to be effective in 2021, they would involve a great deal of preparatory work, and will require many employers for the first time to undertake and collate equality monitoring data.
In addition, the Bill seeks to reform equal pay law and, among other things, would introduce a right for employees to know what their colleagues are paid. This could shine light on pay disparities, and trigger equal pay disputes on an individual, or group basis. With the Supreme Court’s decision in the high-profile Asda equal pay dispute expected shortly, pay inequality issues will be back in the public eye in 2021.
Originally due to take effect from 6th April 2020 but delayed to 6th April 2021, changes to IR35 rules will affect medium and large employers within both the private and third sector (charities and not-for-profit), who use individual contractors.
The rules are aimed at reducing tax avoidance for contractors employed via personal service companies.
Under the new rules, eligible organisations engaging contractors through intermediary companies are 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. This is known as the “status determination”.
The determination process is notoriously difficult, and you may well need to take professional advice. Once the status determination has been made, the client organisation must notify various parties of its decision, and provide an opportunity to challenge the assessment.
Comply with any new rules on Modern Slavery statements
Currently, organisations which supply goods or services, that undertake business in the UK, and have a total turnover of £36 million, need to produce an annual statement outlining the steps that they are taking to combat instances of modern slavery and human trafficking in their own organisation, or within their supply chain. The Government has announced plans to require an increase in the number of employers that need to produce a Modern Slavery statement.
It has not been confirmed when the new requirements will come into force, but the registry is expected to be launched in “early 2021”.
Extended redundancy protection for mothers
Currently, those on maternity leave who are at risk of redundancy must be offered suitable alternative roles in advance of others.
This protection ends once the employee returns to work. Future changes will mean that this protection starts from the date the employee informs her employers that she is pregnant. It doesn’t matter whether the employee informs them verbally or in writing. This protection will last for a further six-month period once the employee returns to work.
The extended protection will also be available to those on adoption leave and shared parental leave. It is not confirmed when this will come into force.
Wave farewell to the furlough scheme
The Coronavirus Job Retention (Furlough) Scheme remains a key part of the Government’s economic support during coronavirus, covering a proportion of employee earnings for employers to help them reduce large-scale redundancies. However, it is likely that 2021 will finally see the scheme end. Currently, the Government has announced that it will end on 30th April 2021. Whether it will be extended further from this date remains to be seen, but employers need to be aware that with the vaccination programme now being rollout, further continuation of the CJRS beyond the stated deadline seems unlikely.
Payroll teams dealing with furloughed employees will need to ensure that final claims are made to HMRC in good time. Employers need to have a strategy in place for what happens afterwards: will furloughed staff be brought back to work, or made redundant? If they are considering redundancies, they should also be prepared to think about alternative job options, when and how to consult.
Prepare for new limits on drafting your employment contracts
The Government has begun consultation on measures to reform post-termination non-compete clauses in contracts of employment. The proposals would be intended to allow workers greater freedom to find new or additional work, and to discourage the widespread use of non-compete clauses. It is possible that non-compete clauses could be made unenforceable altogether, meaning employers would not be able to include them in employment contracts at all.
The Government is also seeking views on extending the ban on exclusivity clauses in employment contracts, to prevent employers from restricting low-paid employees (i.e., those earning below £120 per week) from working for another employer. Currently, the ban only applies to those working under zero-hours contracts.
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;
· a new right for all workers to request a ‘more predictable’ contract;
· an increase to the length of time required for continuity of employment to be broken (from one week to one month);
· new law to restrict the use of non-disclosure agreements (NDAs) in settlement agreements, if there’s been an allegation of harassment or discrimination;
· the introduction of a single labour market enforcement body to ensure that vulnerable workers are protected, and to support businesses in compliance;
· payment of all tips and service charges must go to workers;
· extended leave of up to 12 weeks for parents of children requiring neonatal care;
· a new right to a week’s (unpaid) leave for carers; and
· protection for whistle-blowers is on track to be strengthened;
There will inevitably be cases making or reinforcing new law. The big cases due in the Supreme Court are on average holiday pay (decision not until the Autumn) and employment status for ‘gig workers’ (Uber).
Employers should get ready for an influx of requests from staff who have got used to the benefits of working from home. Rejecting requests will be harder where the employee can demonstrate that they have already worked effectively from home during the extensive period of the current pandemic.
The Government may support requests by legislating so that all jobs should be advertised as open to flexible working.
Acorn HR Services would be pleased to advise you on any element of the issues arising from this newsletter.