Employment Law Update

What’s on the horizon for employment law in 2021?

A number of employment law changes were scheduled to take place last year, some of which were delayed due to the COVID-19 pandemic.  However despite this, employment law continued to evolve and resulted in the introduction of some significant changes in 2020 and more will be introduced this year despite the pandemic still dominating the agenda. 

In this article I will recap on the changes introduced last year and mention what is on the horizon for employment law in 2021.

The employment law changes introduced in 2020

  • The introduction of the furlough scheme and the various emergency measures, including changes to sick pay entitlement and the new right to carry forward holiday that could not be taken due to the pandemic;
  • The requirement for employers to provide a more detailed written statement of employment particulars to all staff including workers by day one of employment;
  • The abolition of the 'Swedish Derogation' which provided an exemption for certain agency workers from the principle of equal treatment;
  • An entitlement to two weeks' paid bereavement leave in the event of losing a child under the age of 18;
  • The threshold for demanding information and consultation arrangements was reduced from 10% to 2% of employees;
  • The reference period for calculating statutory holiday pay was increased from 12 weeks to 52 weeks; and
  • Employers became liable to pay employers' national insurance contributions at 13.8% on termination payments exceeding £30,000.

The expected employment law developments in 2021

As the pandemic still dominates the agenda there is a possibility that the proposed employment law changes for this year may still be further delayed. However the changes we are currently expecting are:

  • The extended Coronavirus Job Retention Scheme (Extended CJRS) is currently due to continue until the end of April 2021. Under this scheme, the Government will continue to contribute 80% of furloughed employees’ salary for hours not worked (subject to a monthly cap of £2,500 for employees who are fully furloughed and a pro rata amount for those who are flexibly furloughed), with employers able to choose whether to top this up.  Employers are required to cover the cost of employees’ wages, national insurance contributions (NICs) and pension contributions for hours worked, but only NICs and pension contributions for hours not worked.  We will no doubt have an update nearer the time on whether this scheme will end or be extended.
  • Changes to the off-payroll tax legislation, IR35, which were due to be implemented in April 2020, will now come into force on 6 April 2021.  These changes will shift the compliance burden from the worker's personal service company to the medium and large "client" organisations that they work for, by treating the client organisation as an employer for income tax and NICs purposes.  This will mean that eligible medium and large sized organisations engaging contractors through intermediary companies will now be responsible for assessing the employment status of those contractors. Employers who currently engage contractors through an intermediary will need to review the arrangements to establish whether the new rules will apply, and what steps need to be taken to protect the organisation. Employers can use the government online tool to find out if there will be an obligation for them to deduct income tax and NIC’s at source when paying the contractor.
  • Brexit and new immigration laws - On 1 January, free movement of persons ended, and as a result a whole new set of immigration laws have been introduced.  A new points-based immigration system now applies to most EEA nationals from 1 January 2021. EEA nationals arriving in the UK now need to comply with the same visa requirements as other non-UK nationals. Employers need to continue to review their recruitment practices and consider whether they need to apply for a sponsor licence considering these changes or, if they have a licence already, whether they need to amend it.

    There are unlikely to be any significant changes to UK employment law in the near future as a result of Brexit, but potential areas for change include rules relating to collective redundancies, TUPE, holiday pay and discrimination law

    In respect of new rules around the interpretation of EU case law, the UK courts will not be bound by any decisions made by the ECJ after 31 December 2020.  Both the Supreme Court and the Court of Appeal have the power to depart from “retained” EU case law in decisions made after 31 December 2020. 
  • Gender pay gap reporting which was paused due to COVID-19 recommences this year.   This means employers with a headcount of 250 or more must report and publish their gender pay gap data gathered by 4 April 2020.  As a result of the furlough scheme employers may face problems when creating accurate information to submit, as the reduced salary payable under this scheme will distort the general remuneration practice. Although the Government has not yet provided guidance as to how it will account for such discrepancies, it is advisable that a narrative explaining this distorted data is included when publishing this report.
  • The Government has introduced incentive payments to support employers who hire new apprentices between 1 August 2020 and 31 March 2021. In addition to the £1,000 that employers already receive for hiring an apprentice (who is either 16 to 18 years old or under 25 with an education, health and care plan or in local authority care) applicants will receive £2,000 for apprentices aged 16–24 years old, and £1,500 for every apprentice who is 25 or over.  The deadline for qualifying employers to apply for an incentive payment is 30 April 2021.
  • The new post-employment notice pay (PENP) formula will amend the current formula to avoid unfair outcomes if an employee’s pay period is defined in months but their contractual notice period is expressed in weeks.  The changes will apply to those individuals who have their employment terminated and where the termination payment is received on or after 6 April 2021.
  • NLW and NMW increase - The government accepted in full the Low Pay Commission's proposed increases to the national living wage and national minimum wage rates which will come into effect on 1 April 2021:
                                 Age 23 or over (NLW rate): £8.91 (up 2.2% from £8.72).
                                Age 21 to 22: £8.36 (up 2% from £8.20).
                                Age 18 to 20: £6.56 (up 1.7% from £6.45).
                                Age 16 to 17: £4.62 (up 1.5% from £4.55).
                                Apprentice rate: £4.30 (up 3.6% from £4.15).
                                Accommodation offset £8.36 per week (up 2% from £8.20).

Notably, the NLW (not to be confused with the Living Wage set by the Living Wage Foundation), which             currently applies only to workers age 25 or over, will also be extended to 23 and 24-year-olds for the first time. 

  • Statutory pay increases

    ♦    The rate of statutory maternity pay, paternity pay, adoption pay, shared parental leave and parental bereavement pay increases from £151.20 to £151.97 per week.

    ♦    The financial award for compensation for unfair dismissal (currently £88,519 or 52 weeks’ salary, whichever is lower) will increase, although the new rate has not yet been announced.

    ♦    The basic award used to calculate statutory redundancy payments and the basic award for unfair dismissal will increase, although the new rate is yet to be confirmed. The current maximum is £538 per week.

    ♦    Statutory sick pay increases from £95.85 to £96.35.

  • The new Employment Bill, which was originally promised in the Queen's speech in December 2019 but was delayed due to COVID-19, may be published in 2021 and is likely to introduce several measures to include:

    ♦   Extending redundancy protections to pregnant employees and maternity returners.  
    ♦   Introducing an entitlement to one week’s leave for parents to take extended leave for neonatal care. 
    ♦   Making flexible working the default unless employers have a good reason not to.
    ♦   A new, single enforcement body for employment right with responsibility for state enforcement of employment law for more vulnerable workers. Ensuring tips left for workers go to them in full.
    ♦   A new right for all workers to request a more ‘predictable’ and stable and contract after 26 weeks' service.


  • The Government consulted on significant proposals affecting workplace sexual harassment in 2019.  A response to the consultation was expected in 2020 but has not yet been published.  The proposals include a new mandatory duty on employers to prevent harassment in the workplace and new rules relating to third-party harassment (amongst others).
  • Currently the Government is carrying out consultation on the following areas of employment law which will close on 26 February 2021:
    ♦   measures to reform post-termination non-compete clauses in employment contracts.
    ♦   measures to extend the ban on exclusivity clauses in employment contracts to cover those earning under the Lower Earnings Limit.


  • Uber BV v Aslam - a Supreme Court judgment is expected on Uber’s appeal against the decision that its drivers were “workers”, entitled to holiday pay, the minimum wage and whistleblowing protection. 
  • Royal Mencap Society v Tomlinson-Blake – a Supreme Court judgment is also expected on what counts as work for minimum wage purposes for workers whose role involves “sleep-in” shifts at their place of work. 

For advice on all areas of employment law, please call our specialist team on 0800 118 1500 or email Reyhana Koser or Ellie Robinson-Brady.