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Employment law changes: what to look out for in 2021

Employment law in the UK is ever evolving. In this article we capture the principal changes which have already, or will be, introduced in 2021.

Recruitment of European Economic Area nationals (“EEA”) - 1 January 2021

Following the EU-UK transition period, EEA nationals now no longer have an automatic right to live and work in the UK.  EEA nationals currently in the UK who have not done so, should apply for either ‘Settled Status’ or ‘Pre-Settled Status’ before 30 June 2021 to continue to live and work in the UK.  EEA nationals will receive a ‘share code’ to evidence their right to work in the UK. 

After 30 June 2021, employers will need to set-up a system of checking ‘share codes’ of EEA nationals. UK employers intending to recruit EEA nationals pursuant to the new Points Based System, will need to apply to have a sponsorship licence. A licence application process time of three to six weeks needs to be built into the recruitment timeline.


UPDATE: The employment law situation in 2022:

Employment law changes in April 2022: everything you need to know

Legal-ease: 2022 visas will help reduce skills drought

Employment Bill delay detrimental to worker's rights


Consultation on measures to reform post-termination non-compete clauses in contracts of employment - 26 February 2021

To facilitate innovation and economic recovery post-COVID-19, the government is consulting on limiting the use of non-compete restrictions, including prohibiting them altogether or conditioning enforceability on an employer providing compensation to an employee in respect of the restricted period.

Employers should anticipate changes to non-compete clauses and, as a matter of course, regularly review all post-termination restrictions.


Public Interest Disclosure (Protection) Bill 2019-21 (“Disclosure Bill”) - 26 February 2021

The Disclosure Bill is due for a second House of Commons reading and is intended to increase protection for whistle-blowers. The Disclosure Bill includes proposals to establish an independent body to enforce prescribed standards when dealing with whistle-blowers and introduce criminal sanctions on those who cause whistle-blowers harm or fail to respond appropriately to a disclosure.

With the EU Whistleblower Directive 2021 to be implemented by EU member states from December 2021, businesses, particularly those with cross border EU dimensions, should be aware of the general trajectory towards greater protections for whistle-blowers and should review and revise their policies on whistleblowing.


The latest on whistleblowing legislation and cases in the UK:

Rise in whistleblower victimisation calls for review to legislation

How (not) to handle disclosures by whistleblowers

Back to basics... Whistleblowing hotlines


Pregnancy and Maternity (Redundancy) Protection Bill 2019-21 (the “Bill”) - 12 March 2021

The Bill is to have its second reading in the House of Commons on 12 March 2021. The current position for those at risk of redundancy and who are on maternity leave is that they must be considered for ‘suitable alternative’ employment in priority to others who are at risk of redundancy.

The Bill proposes to extend this protection, which currently ends once a woman returns to work, to the period from when the employer is first told of the pregnancy to the six month period following the return to work.

During and following the COVID-19 crisis, it is anticipated that many businesses will be considering restructuring and accordingly, factoring potentially greater protections for expectant and new mothers, into redundancy proposals and restructuring risk assessments will be key to mitigate risks of associated liability.


Return of gender pay gap reporting for private sector employers - 4 April 2021 

Penalties for not reporting on the 2019/20 year gender gap for qualifying employers were suspended in response to COVID-19 and are expected to return for 2020/21.

The Equal Pay (Information and Claims) Bill 2019-21 (“Equal Pay Bill”), which is to have a second reading in the House of Commons on 15 January 2021, includes a provision to lower the threshold for qualifying employers to have to report gender pay disparities to 100 employees instead of the current 250.

The Equal Pay Bill also includes a proposed right for employees to be able to access information on their colleagues’ pay. Qualifying private sector employers should be collecting and auditing their data in respect of gender pay disparity. Workers who were furloughed during the reporting period do not need to be included in the report however.

The gender pay gap:

Will pay transparency solve the gender pay gap?

Four-day week would help close gender pay gap

Closing the gender pension gap: What can employers do?

Anticipated close of Coronavirus Job Retention Scheme (“CJRS”) - 30 April 2021

On 17 December 2020, the UK government announced its extension of the operation of CJRS. The CJRS will continue on the same terms as late 2020, i.e. workers will receive 80% of their normal pay for hours not worked, up to the maximum of £2,500 and employers will be liable for National Insurance and pension contributions.

Employers should continually audit their CJRS grant applications and account to HM Revenue & Customs for any mistakes. Employers should apply for CJRS grants by 14 May 2021 for furloughed workers in respect of the last month of the CJRS.

Employers should also prepare for dealing with statutory flexible working requests. There are plans for a new Employment Bill, which would make flexible working the default for all job roles.


Adam Penman is associate at McGuireWoods London.