Upcoming UK Employment Law changes which you may want to consider

3 D Personnel

The UK construction industry legislation is being reshaped by the Coronavirus and Brexit.  You might want to consider the following.

a. National Minimum Wage and National Living Wage

From April 2021 onwards, National Minimum Wage rates are increasing for all age groups; and the National Living Wage will increase from £8.72 to £8.91 per hour.  Also, the age threshold will be reduced from 25 to 23, which will increase the number of payable workers. 

b. Off payroll workers - IR35

Currently workers who provide their services through another person or organisation, for example a Personal Service Company, are responsible for ensuring that they comply with the “Off payroll workers” regulation, better known as IR35.  IR35’s objective is to make sure that workers who essentially work as “employees” pay the same taxes as employees, regardless of the structure through which they provide their services.  As and from the 6th of April 2021, it will become the responsibility of the company who hired the individual.  If the contractor determines that the individual should be paying as an “employee”, then the contractor becomes responsible for paying the “employee’s” PAYE and National Insurance Contributions.

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Note: This rule does not apply to companies that meet only one of the following criteria:

  1. More than 50 full-time employees
  2. Yearly turnover of more than £10.2m
  3. A balance sheet of more than £5.1m

c. The current furlough scheme will end on the 30th of April 2021

The government will continue to pay up to 80% of the employee’s wages, with the employer only having to pay national insurance and pension contributions.

d. Changes to the UK’s immigration rules

It will be more expensive and laborious to hire someone from outside of the UK, as free movement to and from Europe will end and so immigrants, (apart from Irish Citizens), will have to apply to work in the UK via the “points based” system.

If the worker’s profession is on the “Skilled Occupational List”, he/she must have at least an “A” level education, or equivalent, and have a job offer paying at least £25,600 pa. If the worker’s profession is on another list, the “Shortage Occupational List”, the minimum salary is a little lower.  Engineers, architects and quantity surveyors are on this list, but plumbers, electricians and bricklayers are not.

Sponsor Licence costs will also have to be incurred by the company, which will be £1,199 per worker for the first year and £1,000 thereafter, or part thereof.  Note: The administration of the sponsor licence can take up approx. 2 months.

e. EU Citizens already in the UK

If you have had an EU Citizen on your books since before the 31st of December 2020, they can ignore the points based system until the 30th of June 2021.  However, from the 1st of July 2021, they will become illegal workers if they haven’t at least initiated the points-based system procedure.

f. Further possible changes

The government has said that it will introduce the following:

  1. Legislation to ensure that the worker receives 100% of tips
  2. Legislation to give workers a more predicable contract
  3. Legislation to avoid maternity and pregnancy discrimination via redundancy protections
  4. Legislation to give parents an option to take extended leave for neonatal care and give carers unpaid leave of one week p.a.

It has also said that it is evaluating the possibility of making flexible working the standard.

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