7 key changes to employment law in 2021

7 key changes to employment law in 2021

It’s the start of a new year and there’s a few new changes to employment law in 2021 that employers need to watch out for.

Our employment experts have summarised 7 key changes to look out for in 2021. 

New immigration system

A new points-based immigration system went live on 1 January 2021, when free movement of EU nationals to the UK came to an end. Other than Irish citizens, anyone coming to the UK to work will now need to apply for a visa in advance.

The new immigration system is more flexible than the previous points-based system, which typically only permitted employers to sponsor highly skilled individuals.

Under the new system, in most cases, employers will still need a sponsor licence but it will be much easier than it is currently to recruit those who don’t already have permission to work in the UK.

The new immigration system will apply equally to all foreign nationals, with no preferential treatment for those from the EU. The system will not apply to EU nationals already resident in the UK who qualify for settled or pre-settled status.


Brexit and travel

The transition period ended on 31 December 2020 and any British citizen now travelling abroad, including for business reasons, will need to be aware of the additional requirements.

Your passport will need to have at least 6 months left and be less than 10 years old – even if it has 6 months or more left.

If you don’t renew your passport you might not be able to travel to most EU countries and Iceland, Liechtenstein, Norway and Switzerland.

Additional travel actions for business, including for meetings.

  • Check the entry requirements of the country you’re visiting
  • Check your professional qualifications will be recognised if you’re going to be providing services
  • Check whether you need indemnity insurance for employees
  • Check whether you have permission to take goods out of the UK, even if only temporarily (e.g. taking samples to a trade show)


Furlough scheme extension

Due to another national lockdown and the new strain of Coronavirus, the Coronavirus Job Retention Scheme (CJRS) has now been extended until 30 April 2021 and the government will continue to contribute up to 80% of wages.

We won’t rule out the CJRS being extended for longer if we find lockdown extending beyond 17 February when measures are next due to be reviewed. It’s possible the scheme will have a tapering system, as we saw in September and October 2020 before it was due to come to an end on 31 October.

Employers should start thinking what it means for their business if the scheme becomes more expensive and their furloughed workforce becomes costlier. Don’t forget that, until further notice, the job retention bonus has been scrapped and won’t be paid, as originally planned, in February. 


CJRS claims to be made public

From February 2021, HMRC will begin publishing details of employers’ CJRS claims.

The published information, relating to claim periods starting on or after 1 December 2020, will include the employer name, an indication of the value of the claim within a banded range and the company number (for companies and LLPs).

Furloughed employees will also be able to see details of claims made for them after 1 December 2020 in their personal tax account. 


IR35 changes

IR35 changes were delayed by a year, but will come into effect from 6 April 2021.

They apply to organisations which use contractors, engaged via personal service companies, for example an IT consultant who invoices the client via his own Limited company.

All medium or large-sized private sector, in addition to current public sector organisations will be responsible for deciding the employment status of such workers. It means any associated tax and National Insurance Contributions will fall to the organisation, whether they’re a private company, agency or third party paying the worker’s company.


National Minimum wage and Living Wage changes

The National Minimum Wage increases from April 2021 but a key point to note is that the National Living Wage age bracket will be lowered to start at 23, meaning the National Minimum Wage age category 23-24 will be removed.

The increases are:

  • National Living Wage (23+) to increase 2.2%, from £8.72 to £8.91
  • National Minimum Wage (21-22) to increase 2%, from £8.20 to £8.36
  • National Minimum Wage (18-20) to increase 1.7% from £6.45 to £6.56
  • National Minimum Wage (under 18) to increase 1.5% from £4.55 to £4.62
  • Apprenticeship Wage to increase 3.6% from £4.15 to £4.30


EU settlement scheme deadline

EU nationals must be resident in the UK by 31 December in order to qualify for Settled Status, but they have until 30 June 2021 to apply. Being resident means more than just having a job offer, or even being put on payroll, but an EU national who is resident must apply by the June deadline, or lose their opportunity.