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Legal-ease: What HR should have on the radar for 2021

2021 looks set to be another unpredictable year. HR played a vital role in helping employers through the uncertainty and challenges brought on by the pandemic in 2020 and, although many of those challenges remain, there are also other matters on the horizon to be mindful of.

Immigration system

A new points-based immigration system came into force on 1 January 2021 meaning individuals arriving from EEA states are now subject to the same visa requirements as those arriving from non-EEA states.

EEA nationals already living and working in the UK on 31 December 2020 have until 30 June 2021 to apply for and obtain settled or pre-settled status under the EU Settlement Scheme. If they fail to do so, they will be classed as ‘illegal immigrants’.

If not done already, a staff audit should be undertaken to identify any EEA nationals who need to make an application under the EU Settlement Scheme and encourage them to do so as soon as possible.

Irish nationals do not need to apply for settled status to protect their entitlements due to the Common Travel Area between the UK and Ireland.

Businesses without a sponsor licence that want to employ individuals from abroad (including EEA states) should consider applying for one as soon as possible to avoid delay in any recruitment exercise.

Recruitment policies and practices should be reviewed to ensure they are compliant with the new rules, in particular, the ‘right to work’ checks carried out before employment.


National living wage

The national living wage currently applies to workers aged 25 and over. This will be extended to 23 and 24-year-olds from 1 April 2021.


IR35 reform

The IR35 regime is designed to reduce tax avoidance and applies in situations where individuals provide services to a company (the client) via a personal service company (PSC).

The rules require the PSC to determine whether the individual would have been deemed an employee of the client were it not for the existence of the PSC. If so, the PSC must operate payroll, make statutory deductions and pay employer’s national insurance contributions on the fees received for the services.

Changes to the IR35 rules mean that, from 6 April 2021, responsibility for making that determination, where that client is a large or medium-sized incorporated enterprise (as defined in the Companies Act 2006), will shift to the client.

The client will also be responsible for making statutory deductions from its payments for the services and will need to pay the relevant employer national insurance contributions.

Medium and large companies should review their arrangements with contractors and consider what procedures (and changes to existing arrangements) are needed to ensure compliance.


Furlough scheme

The chancellor announced in December that the furlough scheme would be extended to 30 April 2021 and that

the government’s current contribution towards wage costs (80% of wages capped at £2,500 per month per employee) will continue until then. However, this could change again given the latest lockdown measures.

Employers should consider carefully the impact the closure of the furlough scheme (when it comes) is likely to have on their business and plan ahead.

Other matters linked to the pandemic that are likely to keep HR busy include requests for flexible working arrangements and dealing with the effects of ‘long COVID’ that may be suffered by employees.


Pay gap reporting

A Private Member’s Bill proposing changes to the gender pay reporting obligations, including reducing the reporting threshold, is expected to have its second reading early this year.

Government response to consultation on mandatory ethnicity pay gap reporting, is also due, and parliament is set to debate the issue soon.


Maternity leave

There may be changes to protection afforded to pregnant women and those returning from maternity leave. A Private Members’ Bill prohibiting redundancy during pregnancy and maternity leave and for six months after (except in specified circumstances), is due to have its second reading on 12 March.


Certification regime

Deadline for FCA solo-regulated firms to implement the relevant requirements of the Senior Managers and Certification Regime is 31 March 2021.


Don’t get caught out

2021 is likely to be a busy year for HR professionals and, as ever, keeping an eye on the changes, planning ahead and seeking advice early on when needed will be critical to ensuring you are not caught off guard.


Kirsty Churm is a senior associate and Özlem Mehmet a professional support lawyer in the employment team at Kingsley Napley


The full piece of the above appears in the January/February 2021 issue of HR magazine. Subscribe today to have all our latest articles delivered right to your desk.