Changes to the Employment Law in April 2021

Be a responsible employer and get ready for the 2021 employment law changes. Some of these legislations & responsibilities are coming into effect as early as next month, find out what key actions to take in order to stay compliant in this article. 

The HR Team at Goodwille together with the Finnish-British Chamber of Commerce and Danish-UK Association hosted a webinar on this topic:

A few months into 2021 and we continue to see a massive global transformation affecting businesses. The year started with the UK officially leaving the European Union and continued with the Covid-19 pandemic resulting in changes in the movement of talent across borders and practical problems having many workforces working from home. Yet, there are more changes to come – in addition to responsibilities to follow regarding Brexit and Covid-19 there are expected updates in the employment law to start preparing your business for.  

Employment Law changes in April 2021

6 April, also known as the start of the new tax year, is quickly approaching. This corporate threshold does not only entail major financial action to businesses but for the year ahead there are also multiple changes in regards to HR legislation and responsibilities that companies need to be aware of.

1. Pay Increases

Increased National Minimum Wage

The National Living Wage is extended to workers aged 23 and over and increases to £8.91 per hour. The National Minimum Wage increases to: 

  • £8.36 for 21 to 22-year-olds
  • £6.45 for 18 to 20-year-olds
  • £4.62 for 16 to 17-year-olds
  • £4.30 for apprentices 

Increase to Family Leave Pay

The rate of statutory maternity pay, paternity pay, adoption pay, shared parental leave and parental bereavement pay increases to £151.97 per week for up to 39 weeks. Employers can however offer enhanced family leave packages. 

Increase to Statutory Sick Pay

The Statutory Sick Pay increases to £96.35 per week for up to 28 weeks and kicks in if a person is sick for more than 4 days in a row including non-working days. If a person is sick for more than 7 days including weekends, the employee needs to provide a fit note. 

Increase to Parental Bereavement Pay 

Both parents may be able to take 2 weeks of paid leave if their child passes away before they turn 18, or if they have a stillbirth after 24 weeks of pregnancy. 

2. Gender Pay Gap reporting 

The gender pay gap shows the difference in the average pay between all men and women in the workforce and is aimed to ensure that companies manage, develop and reward people fairly irrespective of what gender they are. Organisations with 250 or more employees must report their gender gap figures annually.

Due to the continuing impact of the Coronavirus pandemic, employers will have an additional 6 months after the current deadline to report their gender gap information. The new deadline is set for 5 October 2021. 

3. IR35

The changes to the off-payroll working rules to the private sector, which were delayed a year due from 6 April 2021. The IR35 legislation applies “if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly” (gov.uk). The reasoning behind the legislation is to make sure contractors who are working through an intermediary are being taxed and charged for National Insurance similarly as if they were employees.

Commencing in April, changes have been made in terms of who is responsible for determining whether the IR35 rules apply to the individual case. The change puts more pressure on medium and large-sized private clients rather than the intermediaries directly employing the contractor. The risk of hefty financial penalties is thereby transferred to those clients.

If you fall into the category of medium-large business then you need to prepare your business, so identify which contractors are affected to then inform them and prepare for potentially adding them to payroll. 

small company is if the company meet 2 out of these 3 conditions:

  • Annual turnover must be 10.2 million or less 
  • The balance sheet must be £5.1 million or less
  • The average number of employees must be 50 or less

We wrote a more detailed article on the updated IR35 legislation here.

4. Extension of the furlough scheme 

The furlough scheme has protected more than 11 million jobs in the UK since it was first introduced in March 2020. The scheme was due to end in April 2021, but thanks to the extension, the furloughed workers will continue to receive 80% of their wages (capped at £2,500 per month) until the end of September 2021.

However, with the economy expected to slowly reopen in summer, theemployers will be asked to contribute 10% from July and then 20% from Augusttowards their employees’ wages. The employer still needs to pay pensions and NI contributions. 

What happens if I don’t comply with the new employment law changes?

Complying with the updated employment laws and directives are not just important from a legal standpoint, but also from a Corporate Social Responsibility one. Companies must prioritize to be a good and responsible employer for the sake of their stakeholders, who also are increasingly aware of corporate behaviour.

If you are concerned or want help with your compliance do not hesitate to contact our HR Manager at jacqui.brown@goodwille.com or visit www.goodwille.com/human-resources. Goodwille can act as a fully outsourced HR service provider or support chosen areas of your HR functions.

Goodwille provides essential business services to foreign-owned businesses looking to enter, grow or scale in the UK, to find out more visit goodwille.com.

IR35 changes in April 2021 – How do you need to prepare?

On the 6th April 2021, following the delayed rollout due to the COVID-19 pandemic, changes to the existing IR35 legislation in the Private Sector come into place in the UK, impacting organisations using consultants or contractors working via a Personal Service Company (PSC) arrangement. If you have UK based contractors, who could be challenged as being “disguised employees”, then you may be exposed to greater penalties. Find out more about if it impacts you and get ready for the changes with this article.

What is IR35?

The UK’s IR35 legislation is a set of rules designed to be applied to assess whether contractors are genuinely – contractors rather than deemed employees, for the purposes of paying tax – contractors who work through Personal Service Companies (PSC’s) benefit from a level of tax efficiency. They do not receive payment for absences; however, they do have flexibility over the how and when they carry out work ‘control’. Contractors and their clients try to maximise this tax efficiency by working as if they are self-employed, however they are really employees in practice. The rules were designed to tackle this issue.

How does the IR35 rule change after April 2021 in the UK?

From the 6th April 2021, how the rules are applied to IR35 will change within the Private Sector (this has already occurred in the Public Sector). All medium and large-sized private sector companies will be responsible for deciding whether the rules apply to their contractor engagements, – meaning, it will be the businesses responsibility to assess and decide whether their contracts with PSC’s are operating inside or outside the IR35 rules.

IR35 applies whenever a contractor is providing its services through a personal service company (‘PSC’) to a business; and if the relationship is actually found to be that of deemed employment and employer, then income tax and national insurance charges would be applied to fees earned by the PSC. Historically it has been the domain of the PSC to declare whether any of their engagements fall inside IR35 at the end of each tax year. From 6 April 2021, for medium or large businesses, this responsibility will shift to the end client. Affected end clients will be required to make a ‘Status Determination Statement’ (‘SDS’) at the beginning of each assignment and provide a copy of this to the employment business and the contractor.

Inside or outside of IR35?

Questions to consider determining if the contractor are indeed employees, i.e., “inside” or “outside” the IR35:

Supervision, Direction and Control – Contractors should have the freedom over how and when they complete their work. Therefore, in practice and contractually, are there restrictions over start/finishing times, days required to work? Is the work overseen excessively by the client? If services are not just provided for an agreed assignment, but are for tasks as and when required, this could be an issue.

Right to Substitution – Is there the ability to send a substitute to carry out the work instead, or does it have to be the named consultant?

Mutuality of Obligation – Is the client obligated to offer the contractor work and is the contractor obligated to take this? Therefore, is the contract offered on a project-by-project basis, with payment on completion of this and no obligation to be given and to accept further work? Can the contractor accept other assignments from other clients?

Other factors affecting the IR35 status:

  • Is the contractor using the client’s equipment?
  • Is the contractor taking their own financial risk as an independent company? Do they need their own Professional Indemnity Insurance?
  • Is the contractor considered to be part of the Company’s structure, maybe they have Direct Reports?
  • Is the contractor working for other clients?

If any of the above apply to your contractors, then it might be that they are deemed disguised employers and actions should be taken.

Small companies’ exception to the new IR35 rules

For Private sector business considered “small”, PSC’s will remain responsible for deciding the consultant/contractor’s employment status and whether IR35 applies. Companies Act 2006 defines a medium-large business to somewhat that has two of the following features ;

  • a turnover of more than £10.2 million
  • a balance sheet total is more than £5.1 million
  • 50 employees or more (based on group size, not only the UK employees)

What happens to companies not following the IR35 rules?  

Non-compliance as an employer is associated with penalties, however you will not have to pay fines for errors relating to off-payroll assignments in the first year, except in cases of intentional non-compliance. Starting to review your work with contractors now is, however, a good idea in preparing for April. 

Employment business operating as consultancies and IR35

Some employment businesses operate as consultancies. The new IR35 rules do not apply to contracted-out services. Employment businesses operating as consultancies will have to question themselves whether the engagement with the client is a fully contracted out service (and therefore outside the range of the new rules) or a contract for the supply of labour (and therefore caught by the new rules). Usually, a fully contracted out service will involve providing goods and material as well as work. 

If the employment business determines that the engagement is a contracted-out service, then it is the employment business that will be the client for the purposes of the new IR35 rules. The employment business will then have to decide if it meets the criteria for being a medium or large company, and if so, it will then have the responsibility for undertaking the ‘SDS’ and, if relevant, accounting for income tax and national insurance due.

Actions to prepare for businesses using contractors

To prepare your business for the new IR35 you should; 

  • identify contractors who work in this way
  • decide if they are “inside” or “outside” the rules
  • inform the contractors of their status determination, and any agencies you engage with
  • be ready to add them to payroll if needed – this may involve setting up a UK subsidiary for many of our clients
  • be ready to deal with any disputes
  • maintain a robust audit trail, and test your processes, systems and controls

If you are concerned or want help with your compliance do not hesitate to contact our HR Manager at jacqui.brown@goodwille.com or visit www.goodwille.com/human-resources. Goodwille can act as a fully outsourced HR service provider or support chosen areas of your HR functions.

Goodwille provides essential business services to foreign-owned businesses looking to enter, grow or scale in the UK, to find out more visit goodwille.com

The HR implications of Brexit: What changes for employers and individuals?

Brexit is a word that has not been heard in a while given the headlines which have dominated the Global press of late. However, 31 December 2020 is the end of the transition period and from 1 January 2021 we will be ringing in the end of free-movement for the UK. We blogged about Brexit and People considerations in August 2019, but there have been many changes since then.

For Employers and Individuals alike, there have been a range of messages given over the past year concerning actions to be taken. We hope to provide some clarity in this article.

For individuals

As stated in our previous article, for EU citizens who are resident in the UK by the end of the transition period, they will be able to continue to live, work and study in the UK provided that they take certain actions. The options for these residents will be to apply for Pre-Settled Status or Settled Status depending on certain qualifying conditions.

EU citizens who arrive in the UK by 31 Dec 2020, but have not lived in the UK previously for 5 continuous years can apply for Pre-Settled Status. EU citizens who arrive in the UK by 31 Dec 2020 and do have a record of living in the UK continuously for 5 years can apply for Settled Status. There are regulations around what is considered as living in the country continuously.  As applications are taking longer than expected, applicants have an extended period until 30 June 2021 to make the application.

Pre-Settled status will be granted for five years, but will be lost if the individual leaves the UK for a period of two consecutive years. An individual granted Pre-Settled status may apply for Settled Status once five years continuous residence is met. Individuals granted Settled Status will lose this if they leave the UK for a period of five continuous years.

EU citizens who apply for Pre-Settled Status or Settled Status will be able to access healthcare in the UK, however other benefits such as support for ill health or unemployment are only able to be accessed by those granted Settled Status at the time of writing.

EU Nationals who are not residing in the UK by/on exit day will be subject to the UK new points-based immigration system from 1 January 2021. The new system will treat EU and non-EU citizens equally. From 1 January 2021, anyone coming to the UK to work will need to have a job offer from an approved employer sponsor. Points are assigned for specific skills, qualifications, salaries and shortage occupations, Visas are then awarded to those who gain enough points.

For employers

It is key at this time to understand the composition of your existing workforce. If you do currently employ EU citizens, then you should understand what their plans are by way of remaining in the UK; and if they desire to apply for Pre-Settled Status/Settled Status. It is however entirely probable that you will need to hire employees again in future, whether this be for a new vacancy or a replacement hire.

Employers who want to recruit workers from outside the UK’s resident labour market from 1 January 2021 will need to apply to become an approved sponsor in the UK. Therefore, in order to maintain a skilled and diverse workforce, then this is something to consider. As an employer, you can apply online and the standard processing time for an application is usually 8 weeks. EU citizen staff who are already in the UK or arrive before 1 January 2021 can continue to work without needing to show settlement status until 1 July 2021.

Irish and UK citizens will be able continue to travel freely for business travel and to live and work between both countries under the Common Travel Agreement (CTA). Irish nationals currently working in the UK will not need to apply for settled status in the UK.

As highlighted in our previous article, when carrying out pre-employment screening, HR will also need to be mindful of changing data protection laws.

In terms of whether an employer may place an EU employee on secondment to the UK, until now the UK has enjoyed favourable agreements with most EU countries for taxation and social security purposes. Negotiations are still underway of whether such favourable arrangements may continue in future.

Webinar: HR Matters – Advice for UK SMEs

The people management landscape is ever evolving. As an SME employer, it is not always easy to keep up with changes in employment legislation and best practices while simultaneously stay relevant against competitors.

To address these challenges, we hosted a webinar in collaboration with the Finnish-British Chamber of Commerce, the Danish-UK Association and the Norwegian-British Chamber of Commerce. Presenters Jacqui Brown, HR Manager, and Anna Kuklinska, HR Advisor, both from Goodwille, focused on what you must do as an SME employer in the UK, but also other important considerations, such as being an attractive employer in the UK – what sorts of things will help you attract top talent, retain your talent, and generally improve your employer brand? The presenters also aimed to update the audience about the new employment legislation changes that recently came into effect.

Watch the full recording of the webinar and Q&A, or read some of the key takeaways below.

Recent Changes to UK Employment Law

Typically, every year there are changes to employment law applicable to all UK businesses – and this year is no exception. Though some have been postponed due to the COVID-19 crisis, there are still legislation changes that you must take into consideration as a UK employer now.

Contract of Employment – a Day 1 Right

From April onwards, employees are entitled to receive a statement of “written particulars” – the basics of employment terms and conditions – from day one of employment rather than after two months. There are also changes as to what must be included in the contract, such as benefits and mandatory training. If you fail to provide this as an employer, penalties can be as high as 2-4 weeks of compensation.

Pay Changes and Abolition of the Swedish Derogation

Agencies will no longer be able to avoid paying agency workers the same pay as employees for doing the same job, which provides increased stability and certainty for this employee group. Further, the reference period for establishing the average week’s pay has been extended from 12 to 52 weeks, in order to improve the holiday pay for seasonal workers.

IR35 Changes

The IR35 rules prevent contractors from working through Personal Service Companies (PCS), who are in similar roles to employees, to pay less tax and NICs than actual employees. Where it is concluded by the end client that IR35 applies, the fee payer will become responsible for accounting for, and paying, the related tax and NIC to HMRC.

Non-compliance as an employer is associated with fines, though the reforms have been pushed forward to 2021 due to COVID-19. Reviewing your work with contractors now is, however, a good idea in preparation for next year.

Flexible working

Flexible working is now a default scenario – you need to offer it and if you choose not to, you need to have a very strong business justification for not doing so.

Equality – Prevention of Discrimination and Harassment

Equality and Human Rights Commission have produced a set of guidelines that will now be used as ACAS Code of Conduct – although not a formal law, they will be acting as it in harassment and discrimination cases. Employers have to ensure that they are providing team members with training on harassment and discrimination; how to distinguish these, how to spot the signs and how to react to them.

Being An Attractive Employer – Why Is It Important?

It has never been more important to have a strong employer brand to attract key people and skills. A strong employer brand means your company is considered an attractive place to work, with distinctive values, work culture and career prospects.

Being an attractive employer can have many positive impacts such as the ability to recruit good quality candidates and retaining employees. Offering competitive benefits, taking care of your employees, and offering them training can be costly, though poor staff retention and candidate attraction leads to higher operating costs, low engagement and decreased productivity, which in turn affects your bottom line. Employer attractiveness will also give you a competitive reputation in the marketplace. Employer branding matters for customers as well – a loss of trust with consumers can have devastating consequences for your business.

How to Become an Attractive Employer

There are numerous things you can do to improve your attractiveness as an employer.

  • Additional benefits can be advantageous, though there are plenty of different routes to consider. Think about what your chosen benefits says about you and your company – if you want to be seen as a sustainable employer, focus on benefits in line with those values, such as offering healthy snacks and green business cards.
  • Training enables horizontal growth, which becomes especially important in a smaller organisation where everyone can’t be managers.
  • Corporate Social Responsibility initiatives are becoming increasingly common for businesses in order to make a good deed while creating a positive brand image.
  • Work/life balance and flexible working is, with the current COVID-19 situation, starting to become the new norm. For some employees, it is even a requirement, making it an important aspect when attracting talent.
  • Mental health care in the workplace, such as counselling services and the use of an Employee Assistant Programme, can be beneficial for not only its purpose, but also for how you are perceived as an employer.
  • Competitive family leave policies and retention practices, for example increasing days of annual leave, are other ways of boosting your attractiveness.

Employer Basics – the Musts

Apart from newly implemented legislation and employee benefits, there are some employer basics that you must adhere to if you are operating in the UK. Firstly, you absolutely need to have an employment contract compliant with UK employment law. Due to recent legislation changes mentioned before, already existing templates from a potential parent company pool will not suffice.

There are some HR policies that you must put in place. As a minimum, you need to have a clear, accessible guidance on the company processes and procedures for Disciplinary and Grievance. If you have five or more employees, you must also have a Health and Safety policy. As per GDPR 2018, a Data Privacy Policy should be in place for review and agreement with employees.

Though not required by law, other policies which you may want to consider for a slimmed down policy offering are Equal Opportunities, which can include Equal Pay, and Sickness-, Holiday- and Company Benefits. As for the latter benefits, these external policies give employers a better chance at varying or withdrawing from them, in comparison as if they were stated in the employment contract. It is important to note that SMEs entering the UK from overseas are not required to have all policies in place from day one, but often build them over time.

Employee benefits – what should I consider?

Before introducing, revising or removing a benefit, it is important for the Organisation to consider:

Why the organisation is introducing/offering the benefit.
How does it support the organisation’s business goals?
How does it reward the values and behaviours that the employer needs?

Mandatory Insurances & Benefits

Employers liability insurances is the absolute minimum if you have employees. For most UK businesses, it is a legal requirement and can lead to significant fines if the cover is inadequate. Further, it is a legal requirement to offer a compliant Workplace Pension scheme in the UK, with strict guidelines to follow.

Other than this, there are no other mandatory benefits in the UK unless you consider minimum sickness pay and paid holiday allowances.

What is Important to Employees Today?

Today’s and tomorrow’s workforce consist largely of millennials. These individuals generally value recognition for their work, growth opportunities, career training and development programmes, and self-improvement. Millennials are tech savvy – so access to benefit information around the clock is a definite plus. Personalised rewards and a wide range of different options are also important.

Work/life balance is important, so flexible schedules matter when choosing their employer. Of course, now with the recent pandemic and the many business that have trial run working from home successfully, it will be harder to refuse flexible working requests in the future. Therefore, businesses need to think about how to keep a ‘workable’ structure when considering work/life balance and communication challenges.

Apart from demographics, also consider other characteristics of our employees. If you are hiring salespeople, for example, they are likely to place more value on a good bonus or commission scheme rather than Private Medical Insurance or free food.

Q&A – Your Questions Answered About Benefits and Employment Law

After the presentation, Anna and Jacqui answered the attendees’ questions regarding benefits and employment law.

From an employee point of view, what is better – a variety of benefits, or a more tailored selection? According to Jacqui, it depends on the company’s lifecycle. Sometimes, you have a wish list of benefits but are not financially capable to support them, which might be the case for early stage SMEs. Consider employee benefit services such as Perkbox, which provides variety yet cost effectiveness. Some things like PMIs is a direct cost, but there are “softer” benefits such as office fruit which doesn’t necessarily have to be very costly but be of great value.

Summary of HR Legislation changes for 2016

Gender Pay Gap Audit:
Employers need to start preparing. Initially the ruling was that at ‘sometime’ during 2016, companies with employees of more than 250 would need to run a gender pay audit and publish the results! Now this has been pushed to 2018 (recent development) however a snapshot of the data must be taken in 2017. Look out for the government’s response to the ‘Closing the Gender pay Gap’ consultation which will determine the final policy.

The National Living Wage:
Set to come into force in April 2016, starting at £7.20 and rising to £9 p/h by 2020, the National Living Wage is already proving divisive. 54% of employers expect their pay bill to rise when the NLW is introduced, almost 1/3 are planning to improve efficiency and productivity in response. This will no longer be a voluntary option for employers for those 25 years and older. Some suggestion (CIPD) is that employers may look to employ more under 25’s to combat the increase……some diversity and discrimination issues may be on the horizon!

Sunday Working Hours:
From this Autumn, local authorities and city mayors in England and Wales can extend Sunday trading hours, allowing shops to stay open for longer than the current 6 trading hours. Workers will be able to opt out of Sunday working by giving one months’ notice (rather than 3 months which they currently must give when opting out).

Not legislation, but issues HR should be aware of:
Stress related absence and mental illness in the organisation. CIPD has found that a continued lack of manager training (a stressed employees first point of call is their boss) is contributing to the ongoing issue along with increased workloads and 24 hour access to technology leading to employees becoming unable to switch off. According to the Health and Safety Executive, 9.9 million days were lost to work related stress, depression or anxiety last year, therefore this should be a focal area for HR to look at more mental health initiatives catered for more organisational wellbeing packages and a more supportive corporate culture (as well as signposts for employees to access appropriate help). CIPD have also suggested a policy on stress.

Cyber security – Increasing the organisations cyber security. There have been some high profile data breaches recently (Morrison’s facing a legal claim from 2000 employees whose data was leaked from a disgruntled employee, in 2014 Sony Pictures was also involved in a huge hacking scandal).

For more information on how this might effect you, please get in touch and our HR Department will assist you.

I have got the timepiece for around Four a few months today, it's been to Japan along with replica watches time for England with me at night enduring extreme heat as well as the cool off associated with Britain with no problem in any respect, make sure you if you're planning on acquiring this, simply do it, you will not escape it.