This year has undoubtedly brought a raft of HR challenges for the majority of business owners, from furlough, redundancy and remote recruitment to making workplaces COVID-safe and managing remote workforces. As we edge closer to the end of the year, we look ahead to the key employment law changes you need to know about in 2021.

1 January: New immigration system for hiring staff outside of the UK

From 1 January 2012 a new points-based immigration system will be in place following the Brexit transition. This means that EEA nationals working in the UK will need to comply with new visa regulations. This means that employers will now need to apply for a sponsor licence in order to recruit staff from overseas.

Key points to be aware of:

  • EU nationals already in the UK at the end of the transition period will have a grace period until 30 June 2021 to apply under the new scheme.
  • Employers will need to understand the rules on right to work checks.

Read our full guide to the new scheme and our guidance on how to apply for a sponsor licence.

31 March: end of the Coronavirus Job Retention Scheme (CJRS)

At present the scheme is set to come to an end in March. Otherwise known as the furlough scheme, the CJRS covers 80% of employees’ wages (at a cap of £2,500 per month). Employers can furlough any staff even if they haven’t previously been furloughed, or joined the scheme. We expect a review in January from the government on contributions from employers.

The Job Retention Bonus was due to come into effect in 2021 but we also await an announcement to see if the scheme will still run, or if it will be replaced.

Key points:

  • If you’re furloughing employees be sure to get written agreement and keep this on file for six years.
  • Plan ahead for March 2021 and whether you will be able to bring staff back from furlough or plan for redundancies.
  • Factor in possible increased contributions you may have to make if the government announce any changes to the scheme.

Read our furlough fact sheet for the latest guidance and rules for employers.

1 April: National Minimum Wage increase

The National Living Wage will increase by 2.2 per cent from £8.72 to £8.91, and will be extended to 23 and 24 year olds for the first time.

National minimum wage: April 2021 increases by age

Key points:

  • Be aware of announcements and changes to the wage levels for your payroll.

6 April – IR35 and the private sector

Having been delayed for a year, the reforms to IR35 and the private sector are due into force in April. The new rules will stipulate that the organisation employing a contractor is responsible for assessing their status and whether the IR35 rules apply. If the rules do apply then the business will be classed as their employer for tax and NI.

The rules are driven by HMRC and aims to curb tax avoidance. It aims to identify those freelance contractors who have full time positions within a business and therefore are essentially employees.

Small businesses meeting the criteria won’t be eligible at present.

Key points:

  • Conduct an audit of your contractors – determine hours and roles and whether they would be deemed as employees were it not for their job title.
  • Prepare an SDS Statement – this follows an IR35 assessment and declares the contractor’s employment status for tax purposes.

Read our small business guide to IR35 or see the full government guidance.

Although not confirmed, other employment law changes to look out for next year include:

  • Modern slavery statements – it is expected to become mandatory for business to report on modern slavery. No rules have yet come into force.
  • Legislation which will prevent employers from taking tips and gratuities, instead ensuring that they go to staff.
  • Changes to the rules around continuous service. It is expected that the time required to break a period of continuous service could extend from one week to four weeks. This was part of the Good Work plan to protect employees and their rights.
  • Right to request more predictable and stable working patterns after 26 weeks continuous service. This is aimed at those on irregular hours (such as zero-hour contracts) who would like more stability around their working pattern.
  • Redundancy protection for pregnant staff or new parents could be extended.

For help with any of the changes above please contact our team for advice