What's happening in UK employment law in 2021?
Although the COVID-19 pandemic still dominates the agenda, the employment law landscape continues to evolve. We review the significant developments in 2020 and look ahead to what is on the horizon for employment law in 2021.
Key employment law developments in 2020 Many of the employment law changes seen in 2020 were introduced in response to the COVID-19 pandemic. The most significant was the establishment of the furlough scheme. There have also been various other emergency measures – ranging from the changes to sick pay entitlement to the new right to carry forward holiday that could not be taken due to the pandemic.
The pandemic understandably delayed the progress of most other non-COVID-19 legislative developments. Nonetheless, several changes to employment law took place during early 2020 because the legislation to bring those changes into effect was already in place before the pandemic took hold. For example:
employers became obliged to provide a more detailed written statement of employment particulars to all staff (including workers) by day one of employment;
working parents gained a specific entitlement to two weeks' paid bereavement leave in the event of losing a child under the age of 18;
the reference period for calculating statutory holiday pay increased from 12 weeks to 52 weeks;
the so-called 'Swedish Derogation' (exempting certain agency workers from the principle of equal treatment) was abolished;
the threshold for demanding information and consultation arrangements was reduced from 10% to 2% of employees; and
employers became liable to pay employers' national insurance contributions at 13.8% on termination payments exceeding £30,000.
The Equality and Human Rights Commission (EHRC) also issued significant new guidance on harassment. Finally, at the end of 2020, the government struck a trade deal with the European Union – just before the Brexit transition period ended – with some interesting potential immediate and longer-term implications for UK employment law.
Expected employment law developments in 2021 COVID-19 will continue to dominate government and parliamentary time in the weeks and months ahead, so there may be little room for new legislation or policymaking. However, the government recently launched two consultations:
one on the reform of non-compete clauses, which explores whether non-competes should be paid or banned altogether; and
one on whether exclusivity clauses should be banned in contracts with low-paid employees.
The legislative change with the biggest impact on the immediate horizon is undoubtedly the IR35 reform. At present, the changes are set to take place in April 2021. The new rules require medium and large-sized businesses in the private sector to assess the employment status of contractors who provide their labour through their own intermediary and, if appropriate, operate pay-as-you-earn and national insurance contributions.
These changes were originally intended to take effect in April 2020 but were delayed due to the pandemic. There will be calls for a further delay but, at the time of writing, the changes are still expected to take effect in April 2021.
The new Employment Bill, which was originally promised in the Queen's speech in December 2019 but was also delayed due to COVID-19, may be published in 2021. The bill is likely to introduce or pave the way for various new employment laws, including laws which:
make flexible working the default. As set out in the Conservative Party's election manifesto, the government intends to make flexible working the default position unless employers have a good reason not to. A full consultation is expected, but the Employment Bill is likely to include provision for new rights;
introduce leave for neonatal care. A new right to 12 weeks' paid leave for parents whose babies spend time in special hospital neonatal care units is likely to be included in the Employment Bill and eventually come into force in 2023;
introduce one week's leave for carers. The Employment Bill is also likely to introduce a new right for working carers to take up to five extra days' leave per year to help them to carry out their caring responsibilities;
extend redundancy protection to pregnant employees and maternity returners. At present, employees have priority for alternative employment if they are made redundant during their maternity leave. The government plans to extend this period of redundancy protection to cover the period from when employees notify their employer of their pregnancy (whether orally or in writing) until six months after the end of their maternity leave. Similar protections will apply to parents returning from the adoption or shared parental leave;
introduce the right to request a more predictable and stable contract. The Employment Bill is also likely to introduce a new right for all workers with variable hours to request a more stable and predictable contract after 26 weeks' service. The bill may go further and introduce new rights for workers to be given reasonable notice of their working hours and to be compensated where their shifts are cancelled or curtailed without reasonable notice, and
create a single labour market enforcement agency. The government intends to establish a single body with responsibility for state enforcement of employment law for more vulnerable workers. Its remit would encompass matters such as gangmaster licensing. It would also take over minimum wage enforcement from Her Majesty's Revenue and Customs and have a new role in enforcing holiday pay for vulnerable workers. The Employment Bill is expected to make provision for the establishment of the new agency, but it will likely be many years before it is up and running.
The government committed some time ago to legislating on non-disclosure agreements to make them void unless they meet certain requirements and employees have received specific legal advice thereon. Legislation on this may emerge during 2021, either in the Employment Bill or separately. The EHRC may start consulting on a new Code of Practice on Harassment, building on the major guidelines that it published in 2020. There may also be some progress on ethnicity pay reporting.
Perhaps the most interesting issue to watch is whether the UK government seeks to change any aspect of EU-derived employment law. Changes to employment rights that affect trade or investment would breach the government's non-regression promise in the Brexit trade deal, but more minor changes are allowed, and it remains to be seen whether the government will act early to exercise its new freedoms or whether it is unwilling to rock the boat with the European Union.