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Employment law changes in 2021 – what do you need to know?

Barbara Jamieson is’s business law expert. In this article she talks us through employment law changes in 2021 and what business owners need to be aware of. 

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Employment law changes in 2021 – what do you need to know?

We’ve had a lot to contend with this year, haven’t we? Let’s throw some employment law changes in there for good measure.

To be fair to the UK Government, most of the changes reflect the troubling times we’ve found ourselves in recently.

So, what do you, as a business owner, need to be aware of? What changes do you need to make to ensure you’re complying with your legal obligations?

Employment contracts

Let us start with a change that actually came into force last year but seems to have been overshadowed by everything else. It’s the requirement for workers and employees to have a written statement of their terms before their first day of employment, no matter how long they’re employed for. The statement must include their hours and days of work, entitlement to paid leave, any other benefits they’re entitled to, information on their probationary period, and whether you, as employer, are providing training.

My advice? After you’ve finished reading this article, make it a priority to get employment contracts in place with all of your staff.

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While we’re on the topic of contracts, there will be many of you who have freelancers working for you. If you do, and they work for you through their own limited company (i.e. you pay a company, not an individual), you may have an ‘IR35 problem’.

What on earth am I on about?

IR35 is a short-hand term for the ‘off payroll working rules’. From 6 April this year, HMRC are clamping down on freelancers who act and seem like employees for all intents and purposes, but charge the client (you) from their own limited company. Reason being – these freelancers end up getting tax breaks that are more advantageous than paying tax as an individual.

If you think you have an IR35 problem, first step is to get legal advice – and quickly. We advise on IR35 issues, and can help during one of our free 15-minute legal advice calls:

First thing we’ll look at is the contract. Does the freelancer look like an employee, or a genuine third-party supplier? We’ll then discuss whether that person really is an employee from a practical perspective – because HMRC looks at the entire situation before deciding if any rules are being broken.

These IR35 changes are significant, and there could be substantial fines on the table. If in doubt, get your freelancer contracts checked.

Now, let’s talk money…

Potentially less scary, but potentially affecting your bottom line – changes to the minimum wage, the living wage and statutory redundancy payments. Here’s the summary…

  • From 1 April 2021, the national minimum wage increased to £8.36 per hour
  • From the same date, the national living wage increased to £8.91 per hour
  • Employees with 2 or more years’ service are entitled to statutory redundancy. This is calculated based on weekly pay, length of service and age. From 6 April 2021, pay for working out redundancy payments are subject to a maximum of £544 per week

Add to the to-do list: check your staff salaries, increase salaries where needed, and take note of the redundancy cap (in the event you need to use this).

The Coronavirus Job Retention Scheme (or “furlough”) is now being extended to 30 September 2021, across all industries. However, the contributions are being tapered down. Here’s the highlights:

  • Until 1 July 2021, the UK Government will continue to pay 80% of salaries
  • In July, the UK Government will pay 70% of salaries, and employers will pay 10%
  • In August and September, the UK Government will pay 60% of salaries, and employers will pay 20%

Just bear in mind that, as an employer, you’re still responsible for paying national insurance and pension contributions, even if your employees are furloughed.

And because there always has to be a reference to Brexit…

EU nationals that were living in the UK before 31 December 2020 are currently able to apply for settled or pre-settled status in the UK under the EU Settlement Scheme. This allows EU workers to stay in the UK now that the UK has left the EU.

If you are currently employing EU nationals within your business, it’s important to remind them that the deadline for applications closes on 30 June 2021. After this time, EU workers will have to leave the UK if they haven’t been granted settled or pre-settled status.

To summarise…

The law is always changing; particularly employment law, which has to adapt to fit the changing world we are in. Our world has changed a lot over the past year or so, which means that employment laws have had to flex to make sense.

Issues with employees can be all consuming and take up valuable time that could be spent growing and developing your business, as we come out of what has been a very difficult time for the wedding industry. Make sure you are complying with all of the changes noted in this article, and save yourself the employment law headaches.

At Jamieson Law, we pride ourselves on helping small businesses understand their legal obligations, and trying to make everything that bit less daunting. This includes fixed fee terms and conditions reviews to help business owners feel more secure when contracting with clients.

If you feel like you could benefit from some one-to-one advice on your terms and conditions, or any other legal matter, please take advantage of our free 15-minute legal advice calls. These are not sales calls; just our way of giving back to the business community. You can book a slot here:

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