Employment Law trends to look out for in 2021

2021 is set to be another eventful year for employers and employment lawyers alike, with changes to the employment landscape continuing to develop apace.  Below, we take a look at some of the key things for employers to look out for in the coming year.

IR35/off-payroll tax rules 

While many employers breathed a sigh of relief last year with the delay of the new off-payroll tax rules (IR35) to 6 April 2021 due to the pandemic, the new implementation date is fast approaching.  Under the new rules, businesses (other than those falling within the small business exemption) will be responsible for deciding the employment status of independent contractors for tax purposes, where they operate through an intermediary.  Employers should turn their attention back to ensuring they are ready for the upcoming changes and the additional administrative burden the new regime will entail.

Doing business in a (post-)Pandemic world?   

With so much business having adjusted to remote ways of working over the last year, many may never fully return to previous ways of working.  This may involve a reduction in office space, or the closure of offices altogether, with more flexible working remaining a significant part of the “new normal”.  One interesting question that may arise from more widespread flexible working is what effect this will have on workers’ pay.  In a world where geographic location is seemingly less and less important, it may become harder to justify significant regional variations in pay.  While employers cannot unilaterally reduce pay without breaching an employee’s contract, they will also need to consider the risk of equal pay claims for the same or similar roles (even if done in different locations, as we have seen from the Asda litigation).

The changes brought about by the pandemic will also lead many businesses to restructure their operations during 2021 as a result of a greater reliance on technology and new ways of conducting business.  In addition, the economic downturn faced by most businesses will inevitably lead to further redundancy waves. While the furlough scheme has been extended to the end of April 2021, it remains to be seen what further support will be offered to businesses and to protect jobs after this date. The postponed Budget from November last year has now been set for 3 March 2021, which may see the announcement of further support. Notably, however, this date is more than 45 days ahead of the end of the furlough scheme, this being the minimum waiting period, for collective consultation purposes, for businesses proposing 100 or more redundancies within a 90 day period.

Inclusion and Diversity

With the #MeToo and Black Lives Matter movements maintaining momentum into 2021, this year will see a continued focus on diversity and inclusion for employers.  The government is currently considering the introduction of ethnicity pay gap reporting, in addition to a new legal duty on employers to protect workers from sexual harassment in the workplace.  If introduced, the latter would enable the Equality and Human Rights Commission to take enforcement action against employers, regardless of whether an employment tribunal claim has been raised.

Brexit 

While the UK is now able to depart from EU employment law (subject to ‘level playing field provisions’ in the Brexit trade deal), it is unlikely that this will lead to many important changes in the immediate future.  However, a new points-based immigration system is now in place, making it harder for employers to hire EU or EEA nationals, other than Irish nationals, who will now require a visa to live and work in the UK, unless they have pre-settled or settled status under the UK’s EU settlement scheme. Employers will need to ensure the new rules are part of their Right to Work checks for new employees.

It is also possible that Brexit may impact the current arrangements for the free flow of personal data between the UK and EU, although this is considered unlikely.  Under terms of the trade deal, personal data can continue to flow freely between the EU and UK for at least four months (with a possible further extension), and it is hoped that the EU will make an adequacy decision in this time in relation to the UK.  Given the UK has already adopted the GDPR, an adequacy decision will avoid employers having to put in place lengthy alternative contracts in relation to the transfer of personal data.

With some key cases also on the horizon, including the Supreme Court’s decision in the long-running Uber case which will settle the question of whether its drivers are workers (and so entitled to certain employment rights) or independent contractors, 2021 looks to be another significant and challenging year in the world of employment law.

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