Legal Issues Facing Businesses in 2021
21st December, 2020
2020 has been challenging in a myriad of ways, with both businesses and their legal advisors having to adapt to a new way of working and respond to a dynamic programme of support in light of the Covid-19 pandemic.
As the year draws to a close, our focus turns to what challenges and opportunities the new year will bring.
The key legal issues to be aware of in 2021 are:
The transition period comes to an end on 31 December 2020 and, at the time of writing, a trade deal has not been finalised between the European Union and the UK. The impact of the trade deal remains unknown. In the short-term, there are unlikely to be any significant changes to employment law, however, this may be subject to review.
Employers who wish to recruit staff from overseas, or who have existing staff from outside of the UK, will need to be aware of the changes to the immigration system. The new immigration system went live on 1 December 2020 and will apply to EU nationals from 1 January 2021. Government guidance has been published on the new Skilled Worker system and employers should consider applying for a sponsor licence at an early juncture to avoid delay.
Coronavirus Job Retention Scheme (‘Furlough’)
In November the CJRS was extended to 31 March 2021. On 17 December, the scheme was further extended to 30 April 2021. The scheme will cover 80% of furloughed employees’ wages (subject to a cap of £2,500 per month). The Chancellor’s December announcement confirms that the government will continue to make the contribution at this level to the end of the Scheme.
Employers are advised to monitor any changes to the scheme, and to plan for the end of the scheme in April.
Due to the extension of CJRS, the Job Retention Bonus which was due to be paid in February 2021 will no longer be paid. However, the government anticipate launching a new ‘retention incentive’ in due course.
Minimum Wage Increase
From 1 April 2021, the National Living Wage will increase from £8.72 to £8.91 per hour. It will also become payable for any workers aged 23 and above. The current scheme only applies to workers aged 25 and above.
National Minimum Wage rates are also set to increase from 1 April 2021 for younger workers and apprentices.
The rules on off-payroll working which currently apply to public sector organisations only will be extended to medium and large-sized private sector organisations from 6 April 2021. The changes will see responsibility for operating off-payroll working from an intermediary (known as a personal service company or PSC) to the organisation or business to whom the individual is supplying their services.
Medium and large-sized organisations who engage individuals through PSC’s should ensure that they understand how their obligations will change, as will recruitment agencies and other intermediaries, and individuals who supply their services through an intermediary.