Looking ahead to 2021: Employment, Immigration and Pensions Law developments

With another lockdown in place across all parts of the UK, the coronavirus pandemic will continue to dominate the headlines for months to come. As with 2020, it will be the most challenging issue facing employers and HR professionals.

The extension of the furlough scheme until the end of April 2021 is welcomed by many but brings its own challenges. Similarly, the end of the Brexit transition period and the start of a new era for the UK and EU is a development that has been met with delight or dismay.

There are many other developments in 2021 that employers need to be aware of and as usual, many of the changes take effect in April. Note in particular the extension of the National Living Wage to workers aged 23 and over and the extension of the off-payroll working rules to the private sector, a measure that should have been implemented in April 2020 but was put back because of the coronavirus pandemic.

Employment, Immigration & Pensions Law Developments:

• Furlough scheme
• Brexit: Implications of the Trade Agreement
• Brexit: Data protection
• Furlough claim information made public
• New consultation papers
• Budget
• Increases in statutory rates
• Gender pay gap reporting
• Off-payroll rules in the private sector
• Post-employment notice pay (PENP)
• Extension of furlough scheme
• EU Settlement Scheme
• Right to Work checks
• Upcoming judgments and hearings
• Immigration
• Pensions
• Conclusion

January

Furlough scheme

On 17 December 2020, the Chancellor announced another extension to the furlough scheme which will now continue to 30 April 2021. The Government still contributes 80% towards wages up to a maximum of £2,500 a month and employers are required to pay employers’ NICs and pensions as well as wages for any hours worked.

Claims for furlough days in December 2020 must be made by 14 January 2021.

Brexit

Implications of the Trade Agreement

The EU-UK Trade and Cooperation Agreement is divided into seven parts and relevant for Employment law and workers’ rights is Part Two: trade, transport, fisheries and other arrangements. The issue of a level playing field was one of the most protracted parts of the negotiations. The Agreement refers to labour and social levels of protection in a number of areas including fundamental rights at work and fair working conditions and employment standards. There is no obligation for alignment but a Party shall not weaken or reduce its labour and social levels of protection below the levels in place at the end of the transition period in a manner affecting trade or investment.

For more information see our employment law and workers’ rights article here.

Data Protection

After a very real concern that some personal data flows between the EU/EEA and UK without adequate arrangements would no longer be possible, for the time being at least, the EU-UK Trade and Cooperation Agreement includes a provision to provide for the continued free flow of personal data from the EU and EEA EFTA States to the UK. This is for no longer than six months, with the hope that an “adequacy decision” is adopted during that time. However, employers must not be complacent as there are very real hurdles to an adequacy decision being given in time. Please see our more detailed summary here with its link to the potential impact on employers.

February

Furlough claim information made public

From February, (no date is confirmed as yet), HMRC will publish information about employers who make claims under the furlough scheme for periods starting on or after 1 December 2020. The reason for this change is to increase transparency and to deter fraudulent claims. The following information will be published on GOV.UK:

• The employer name.
• An indication of the value of the claim within a banded range (there are 14 different bands).
• The company number for companies and Limited Liability Partnerships (LLPs).

If an employer is concerned about a serious risk of violence or intimidation from their details being published, they can inform HMRC and provide evidence about the reason for their concern. Information about how to request that HMRC do not publish the details will be available shortly and HMRC have stated that this will be done in sufficient time before the first publication date.

Back in September 2020, HMRC reported that up to £3.5 billion of furlough scheme payments may have been claimed fraudulently or paid out in error. That figure is likely to be higher now. HMRC have also reported that its fraud hotline had received over 1,900 reports of fraudulent furlough claims and the first arrests for furlough fraud have already been made.

New consultation papers

On 4 December 2020, the Government issued two consultation papers and the consultation period for both ends on 26 February 2021. The consultation papers did not attract a great deal of publicity at the time and may have slipped under the radar but are worth knowing about because of their potential implications.

The first consultation paper relates to the reform of post-termination, non-compete clauses in employment contracts. Non-compete clauses (a form of restrictive covenant) are a useful way for employers to protect their legitimate business interests by restricting an individual’s ability to work for a competing business or to set up a competing business for a specified period after leaving employment. However, unless the clauses are reasonable in scope, duration and geographical area they will be unenforceable. The aim of the consultation is to support economic recovery from the impacts of the coronavirus pandemic and the Government is “exploring avenues to boost innovation, create the conditions for new jobs and increase competition.” It is seeking views on two options:

• Proposals to make non-compete clauses enforceable only when the employer provides compensation during the term of the clause. The Government’s view is that this proposal would discourage widespread use of non-compete clauses by employers so that “individuals have the freedom and flexibility to use their skills to drive our economic recovery.” The Government states that this proposal could be complemented by additional transparency measures and statutory limits on the length of non-compete clauses. Generally, the more senior the employee the longer the period of the non-compete clause and it is difficult to envisage that a standard limit would be effective across the board for all employees. Arguably, the current system works well in that the Courts take into account what is reasonable in the specific circumstances to ensure that the length of a non-compete clause is reasonable and lasts for no longer than necessary.
• An alternative proposal is to make post-termination, non-compete clauses in contracts of employment unenforceable and the aim of this is to boost innovation and competition. This begs the question how would legitimate business interests be protected in the absence of any non-compete clauses? If adopted, this proposal could well result in increased litigation and uncertainty neither of which are likely to be conducive to innovation.

Back in 2015, exclusivity clauses in zero hours’ contracts were banned because they prevented workers from working with other employers even if their zero hours’ contract did not guarantee any work. The second consultation paper proposes extending the ban on exclusivity clauses to prevent employers from restricting low-paid employees, those earning under £120 a week, (the current Lower Earnings Limit) from working elsewhere.

This means that low-income workers can take on additional work to boost their income and it is the Government’s view that the proposals will “maximise opportunities for low-income workers to find new work and apply their skills to drive the economic recovery.” An estimated 1.8 million workers are employed in one job and receive a weekly wage below the Lower Earning Limit. According to the consultation paper, 26% of these would like the opportunity to take on additional work with a second employer.

March

Budget

The Autumn 2020 Budget was cancelled because of the coronavirus pandemic and the next Budget will take place on 3 March 2021. On 5 January 2021, the Chancellor indicated that any additional support for firms and workers affected by the coronavirus pandemic could be announced in the Budget. However, on the same day, the CIPD called for the furlough scheme to be extended until at least the end of June and the Chancellor should make a decision now rather than waiting until the Budget. This would give employers some certainty. With the ever increasing rate of coronavirus cases and another national lockdown in place, it will be interesting to see if a decision is made about extending the furlough scheme sooner rather than later.

April

Increases in statutory rates

From 1 April 2021, there is a significant change to the scope of the National Living Wage (NLW) with a reduction in the current age threshold. The NLW will be payable to workers aged 23 and over rather than workers aged 25 and over as at present.

From 1 April 2021, the NLW and the National Minimum Wage (NMW) increase as follows:

• For workers aged 23 and over from £8.72 to £8.91
• For workers aged 21-22 from £8.20 to £8.36
• For workers aged 18-20 from £6.45 to £6.56
• For workers aged 16-17 from £4.55 to £4.62
• Apprenticeship rate from £4.15 to £4.30

The increase in the NLW rate to £8.91 represents an increase of 2.2% and the age threshold will reduce again to those aged 21 and over by 2024.

From 4 April 2021:

• Statutory maternity, adoption, paternity, shared parental leave and parental bereavement leave pay increases from £151.20 a week to £151.97 (or 90% of average weekly earnings if this is less than the statutory rate).

From 6 April 2021:

• The weekly rate of statutory sick pay increases from £95.85 to £96.35.

Gender pay gap reporting

The obligation to publish information about gender pay gaps has been in place for almost four years now. The deadline for reporting in the private and voluntary sector is 4 April 2021 (30 March 2021 for the public sector).

Shortly after the first national lockdown was announced in March 2020, the Government decided that employers did not have to report their data for the reporting year 2019/2020 because of the coronavirus pandemic and they will not be required to report it at a later date. At the time of the announcement, the majority of employers had probably already gathered the relevant data with many already reporting on it.

There has been no announcement yet about reporting requirements for 2020/2021. For now, employers should assume that there will be a requirement to report and should ensure that the relevant data is available. The Government may still make an announcement about suspension of reporting for 2020/2021 and we will keep you updated.

Regardless of any announcement about suspension, employers can of course continue to collate the data and to run the calculations for internal purposes without reporting externally. This will enable them to track changes against previous years and adapt their action plans if appropriate.

Off-payroll rules in the private sector

The off-payroll working rules tightening up on IR35 compliance were due to be extended to the private sector on 6 April 2020 but were postponed because of the coronavirus pandemic. The new date for implementation is 6 April 2021. Preparation for the new rules is essential and key to this is gathering the relevant data in relation to any contractor relationships. Blake Morgan can assist with your data gathering exercise and the assessment of your contractor terms of engagement. For more details on IR35 see here.

Another change effective from 6 April 2021 is that HMRC are able to recover a “deemed employer PAYE debt” from a “relevant person” in off-payroll working arrangements where the employer has not deducted income tax and there is no realistic prospect of recovering it from them in a reasonable time. This means that HMRC can recover the tax from other parties such as the agency or client.

Post-employment notice pay (PENP)

On 6 April 2021, there is change to the formula in relation to PENP where the employee’s pay period is expressed in months but the contractual notice period is expressed in weeks. The provision applies where the termination payment is received on or after 6 April 2021. The reason for the change is to remove the inconsistency and unfair outcomes to ensure that PENP does not vary according to the number of days in the monthly pay period.

Extension of furlough scheme

The furlough scheme will continue to 30 April 2021, unless extended again.

Updated Government guidance was published on 5 January 2021. This confirms that employers can furlough employees with caring responsibilities if they are unable to work or are working reduced hours because of caring responsibilities arising as a result of COVID-19. Caring responsibilities include caring for children who are at home because of the closure of schools or childcare facilities and caring for a vulnerable individual in the household.

The introduction of the Job Support Scheme (the replacement for the furlough scheme) was postponed because of the various extensions of the furlough scheme. Similarly, the Job Retention Scheme Bonus was withdrawn and the Government said it would announce a new retention incentive at another time. It is unknown whether either of these initiatives will be pursued in 2021.

June

EU Settlement Scheme

The deadline for applications under the EU Settlement Scheme is 30 June 2021 for those EEA nationals who arrived in the UK prior to, or on 31 December 2020.

Right to Work checks

Freedom of movement ended on 31 December 2020. EEA and Swiss nationals can continue to use their passport or national ID card for right to work checks purposes until 30 June 2021.

For more details about immigration developments see our article here.

Upcoming judgments and hearings

Several important employment cases were heard in the Supreme Court in 2020 and we are still waiting for the judgments.

Royal Mencap Society v Tomlinson-Blake

In February 2020, the Supreme Court looked at how sleep-in shifts should be viewed for the purposes of NMW legislation. The Court of Appeal held that sleep-in workers are only entitled to receive NMW when they are awake for the purposes of working. This followed on from a complex array of cases at Employment Tribunal and Employment Appeals Tribunal level. It is hoped that the Supreme Court decision will provide a clear conclusion.

Uber BV and others v Aslam and others

In July 2020, the Supreme Court heard an appeal about the employment status of Uber drivers, the Court of Appeal having previously held that the drivers were “workers” for the purposes of the Employment Rights Act 1996, Working Time Regulations 1998 and National Minimum Wage Act 1998. Although the judgment will be high profile, it is likely to be very fact-specific and may not have huge implications for other employment status cases that follow.

Asda Stores Ltd v Brierley and others

In July 2020, the Supreme Court heard an appeal about the issue of comparators in an equal pay claim. The Employment Tribunal, EAT and Court of Appeal all held that a group of around 7,000 claimants, who were mostly female retail store employees, could compare themselves to distribution depot employees, who were mostly male, even though they two groups worked at different sites.

A number of important employment cases relating to different aspects of holiday pay are listed for hearing in the Supreme Court in 2021.

East of England Ambulance Service NHS Trust v Flowers and others

On 22 June 2021, the Supreme Court will consider whether voluntary overtime should be taken into account when calculating holiday pay.

Chief Constable of the Police Service of Northern Ireland and another v Agnew and others

On 23 June 2021, the Supreme Court will consider the issue of whether or not a “series” of unlawful deductions from holiday pay would be interrupted by gaps of more than three months.

Harpur Trust v Brazel

On 9 November 2021, the Supreme Court will consider whether the holiday pay of part-year workers on permanent contracts should be reduced to reflect the fact that they do not work throughout the year.

Immigration

As expected, 2020 saw many developments in preparation for the UK’s departure from the EU as well as changes to take account of the coronavirus pandemic.

For more information about right to work checks, the EU Settlement Scheme and the new Immigration System see our article here.

For more information please contact a member of our Immigration team.

Pensions

The cap of £95,000 on public sector exit payments finally came into force on 4 November 2020 when the Restriction of Public Sector Exit Payments Regulations 2020 were introduced.  The cap is part of a wider set of reforms intended to restrict public sector pay and pensions. The Regulations are proving tricky for employers to apply. In particular, the pensions implications appear not to have been considered until the last moment (resultant legislation is still in the consultation stages). Our article considers some of the specific difficulties in applying the cap as well as some recommended steps for employers.

For more information please contact a member of our Pensions team.

Conclusion

The ongoing coronavirus pandemic will continue to bring many challenges for employers and HR professionals in 2021. With another lockdown in place, many employers will once again have to manage employees working remotely on a large scale. Employers should continue to be mindful of their employees’ mental wellbeing (whether they are working from home or back in the workplace) as well as the possibility of individuals continuing to suffer the effects of “long-Covid”.

If working from home is not feasible, employers need to ensure that they keep up to date with all guidance about making workplaces COVID-19 secure.

One issue that is likely to be increasingly relevant in the months ahead as access to vaccinations increases and workplaces re-open is what, if anything, employers can do to require their employees to be vaccinated and what to do if they refuse?

It is likely that we will see a continued increase in Employment Tribunal claims in 2021. Many of these will be coronavirus or furlough-related and will include claims in areas such as whistleblowing, health and safety, redundancy and protective awards. The most recent Employment Tribunal quarterly statistics were published on 10 December 2020 and cover the period July to September 2020. Single Employment Tribunal claims are at their highest level since 2013/14 and this is almost certainly due to the impact of the coronavirus pandemic on the economy and the significant increase in unemployment.

It seems like another age now but in December 2019, a new Employment Bill was announced and legislation was expected in 2020 on significant topics such as:

• Extending the period of redundancy protection for expectant and new mothers returning to work after maternity leave until six months after the end of maternity leave (and possibly changes to other types of family leave).
• Introducing the right to additional paid neo-natal leave for parents whose children spend two or more weeks in neo-natal care.
• Providing one week of leave for unpaid carers.
• Introducing the right to request a more predictable work contract.
• Establishing a single enforcement body for employment rights.
• Introducing a potential requirement to offer flexible working as a default option.
• Strengthening the rules on tips and service charges so that distribution of these is more transparent.

It remains to be seen whether any of these proposals will be progressed in 2021 when the Government’s priority will continue to be dealing with the unprecedented challenges of the coronavirus pandemic.