What Employment Law Changes To Expect In 2021

An outline of the scheduled Employment Law amendments that we can begin preparing for in 2021.


James Rowland

Commercial Director James leads Account Management, Sales and Marketing at Neathouse Partners.


04 December 2020


17 July 2024
3 min read

This article will outline the scheduled Employment Law amendments that we can begin preparing for in 2021. This will cover the following upcoming amendments;

  • New immigration system;
  • IR35 review and reforms;
  • Annual National Minimum Wage rises;
  • Expected Coronavirus Job Retention Scheme Changes;
  • Modern Slavery and Human Trafficking Statement amendments;
  • Further extended redundancy protections in relation to new parents, including maternity, adoption and shared parental leave;
  • Potential other changes.

New immigration system

A new points-based immigration system will commence on the 1st January 2021 following Brexit.

From the 1st January, EEA (European Economic Area) Nationals will need to comply with the visa requirements of non-UK nationals.

Employers will need to prepare for the new system to ensure that any existing EEA employees remain entitled to work in the UK.

Employers may also need to apply for a sponsor licence to assist with visa applications for any EEA employees.

Existing EEA employees have the ability to apply for settled or pre-settled status; otherwise, any European National within the UK will have a grace period of until 30th June 2021 to apply under the settlement scheme.

It is the responsibility of the employer to ensure that all employees and workers have sufficient rights to work in the UK.

We do have a full article on this if you would like to find out more.

IR35 review and reforms

IR35 changes are due to take force on 6th April 2021 regarding off-payroll working in the private sector.

These amendments were due to take place in 2020 although they have been pushed back due to the coronavirus pandemic.

The IR35 changes will decrease tax avoidance of self-employed contractors, particularly those employed through personal service companies.

The employer will be responsible for determining the status of each contractor and assess whether IR35 applies.

If IR35 does apply, the paying employer will be responsible for any tax and national insurance liability.

In preparation for this, Employers should ensure that contracts and policies are IR35 compliant.

Annual National Minimum Wage rises

There are two upcoming changes to the National Minimum Wage in 2021;

The ordinary April National Minimum Wage rise

National Minimum Wage is reviewed and increased in April of each year to reflect inflation. The new implemented National Minimum Wage level will override any previous rate.

The April 2021 National Minimum Wage rates have not yet been announced.

However, speculation expects that the 2021 rates will bring a minimal increase following the previous years’ considerable rise of up to 6.5%.

It is therefore not expected that two significant increases will happen consecutively.

Change in the National Minimum Wage age brackets

National Minimum Wage rates differ depending on the age bracket of the earning staff.

This is split into 25 and over, 21 to 24, 18 to 20, under 18 and an apprentice rate with the highest rate applicable to the eldest bracket.

The highest rate reserved for individuals of 25 and over is set to reduce from 25 to 23 alongside the implementation of the 2021 rates in April.

However, this is expected to be delayed as a result of the coronavirus pandemic.

All National Minimum Wage amendments must be complied with by all Employers as soon as they come into force.

Expected Coronavirus Job Retention Scheme Changes

The Coronavirus Job Retention Scheme which was extended from October 2020 until the 31st March 2021 will continue to cover 80% of furloughed employees’ wages (subject to the £2,500 cap per month) until 31st January 2021.

Thereafter, the government will review and potentially adjust the contribution levels from January until the scheduled end of the Scheme in March.

We expect that the government will reduce their contribution level and require the employer to subsidise a percent for any employees remaining on furlough.

This may be introduced in increments to ease Employers into being financially responsible for furloughed staff.

Modern Slavery and Human Trafficking Statement amendments 

Organisations of an annual turnover of £36 million or more are required to issue Modern Slavery, and Human Trafficking Statements setting out the risk and precautions that the Company will undertake to prevent either from happening.

The requirement to issue this statement is being extended to include public sector bodies with a budget of £36million or more.

In addition, the government is aiming to make it mandatory for such organisations to also report on certain areas when publishing any Modern Slavery or Human Trafficking Statements.

The government are looking to implement a reporting service where there will be a single reporting deadline.

This is envisaged to be implemented within 2021 although the government are due to publish further guidance on this prior to the end of 2020.

Further extended redundancy protections...

...in Relation To New Parents, Including Maternity, Adoption And Shared Parental Leave.

Employees who have been off for family-related leave (maternity, adoption and shared parental leave) are entitled to extra protection against redundancy.

The government consulted in 2019 to review these protections and later announced the Employment Bill in December 2019.

The Bill intents to extend redundancy protections and prevent pregnancy / maternity discrimination.

At present, there is no further information regarding details, coverage or expected timeframes although we envisage that we may hear more about this in 2021.

Potential other Employment Law changes

There are also the following employment law amendment to look out for which have been announced but not yet timetabled;

  • Further public sectors reforms on exit pay;
  • Measures to ensure that any tips or gratuity left for workers goes directly to them in full;
  • The right to request a more predictable contract for all workers;
  • Extending the period of time required to break continuity of service.

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