Employment Law Update | February 2021
Employment Law Update | February 2021
Our HR Consultant, Daniel Meyer-Lopez, provides us with the Employment Law Update | February 2021.
Roadmap out of lockdown
Boris Johnson has announced that from March 8th we will start to see restrictions lift in England, following a four-step roadmap back to normal life. The lifting of restrictions will take place in four steps and hopefully at the same time for all areas across England. The four steps are outlined in detail on the Government website. Hopefully by April 12th some businesses that have had to close their doors will be able to begin to reopen. Those in other sectors will follow behind in the next steps. It is important to note that the dates in the roadmap are indicative and subject to change if necessary.
It is advised that when the ‘Stay at home’ rule is dropped, people continue to work from home if possible. This is to help reduce the risk of spread both in the workplace and whilst traveling to work. It is advised to minimise the number of journeys they make where possible, avoiding travel at the busiest times and routes. Businesses therefore need to be mindful that employees may have been working for the best part of the year. They may have changed their lifestyle based on being able to work from home. Employers should therefore be alive to the fact that there may be a significant number of employees who wish to make applications for flexible working. Policies should be followed when considering any such applications.
Businesses may have also realised that there are significant savings to be made by not having a full quota of staff in the business where staff can work from home. Therefore, they may opt to have more staff working from home or a ‘hot desk’ arrangement. We would advise that employers should put this out to their staff as not everyone will want to work from home, or on the flip side, go back to the office. A short survey about employees’ views will gauge how staff feel about the work / working from home split.
The government has given its word that they will continue to support families and businesses throughout the steps set out. More details surrounding this will be released by the Chancellor in the Budget on March 3rd.
All change please, all change
No this is not a rail announcement. In April every year there are usually changes to statutory rates of maternity pay, sick pay and adoption pay.
The pay rates are changing as follows:-
- Statutory sick pay will increase from £95.85 per week to £96.35 per week;
- Statutory leave such as maternity, paternity, adoption, shared parental and parental bereavement leave will increase from £151.20 per week to £151.97 per week.
However, this April, there will be a number of changes that will have a significant impact on employers and employees.
Change to IR35 rules for self-employed workers
The IR35 rules prevent contractors from working through a Personal Service Companies (PSC), who carry out similar work to the employees. This usually leads to a reduction in the amount of tax and NI which is paid. Initially, contractors determined whether IR35 applied to them but, in April 2017, public sector employers were tasked with making this decision.
From 6 April 2021, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your worker’s employment status. This includes some charities and third sector organisations.
If the off-payroll working rules apply, your worker’s fees will be subject to tax and National Insurance contributions.
Businesses will also need to:-
- Provide an employment status determination to the worker, as well as the reasons behind that determination
- The ‘worker’ will be able to dispute the determination given to them if they disagree with it.
This is likely to be onerous for businesses who have used self-employed contractors for many years and will then have make determinations for their self-employed staff.
Businesses will have to use the “multi-factorial” test to determine whether staff are considered as ‘self-employed’ or not. This is not an exhaustive list but includes the following:-
- Control – i.e. how much control does the business have over the ‘worker’ – i.e. do they tell them what to do, when to do it, how to do it;
- Can the ‘worker’ send a substitute to carry out their role if they aren’t available? Even in a clear self-employed situation, this is very unlikely to happen as self-employed staff / consultants are usually retained on the basis that they have sufficient quality and / or experience to be able to command the day rates that often come with these roles;
- Equipment / tools – who provides them? If the business provides everything that the worker needs to complete the job then this is usually an indicator that they are not self-employed;
- If however they have to purchase equipment / tools / laptops etc., before they carry out their role, this is more likely to be viewed as a self-employed;
- Hours of work – can they work the hours they want?
- Holidays – do they just tell the business when they are going to be ‘off’
These can be difficult questions to answer as even in the most straightforward case of a self-employed relationship, for example, that ‘worker’ would still have to say “I am on holiday next week so won’t be available”. Granted they wouldn’t need to ‘book’ the holiday per se, but they would still need to let the business know that they won’t be available.
HMRC does provide a tool for you to use to determine whether someone is self-employed for the purposes of IR35 or not. However, it does say that this is not ‘determinative’. Therefore, businesses should still consider all of the above when deciding if a ‘worker’ is self-employed or not.
HMRC has confirmed that businesses will not be fined for any errors during the first year following the rule change.
Working from home – or are they really?
With the third lockdown came a further message to ‘Stay at home’ and to work from home where you can reasonably do so. The Office of National Statistics (“ONS”) reported that in April 2020 46.6% of UK employees did some remote working. This is in contrast to only 12.3% in 2019.
Businesses have identified that there are huge costs savings if staff work from home, even on a part-time basis. Office space can be saved, overheads and running costs are reduced. As such, there is a massive incentive for businesses to move away from purely office-based working.
However, we have had increasing numbers of businesses contact us for advice over performance and how to deal with underperformance. Businesses are able to monitor employees’ output and as a result, performance can be easily tracked.
Businesses should not be too quick to revert to office-based working purely due to underperformance. Particularly if it is only a small number of individuals. If businesses decide to return to the office, then those who have adapted (and I think we all have) are likely to push back against this and may submit formal applications for flexible working or grievances. Businesses should tackle the issue as opposed to punishing those who comply.
If staff are not performing, then these issues should be addressed as you would normally. This could be by way of performance reviews, 121s, performance improvement plans, and disciplinaries if appropriate.
Employment Tribunal Claims on the rise
According to research, Employment Tribunal (ET) claims have increased by 27% when compared with the year before which was only a 7% increase. The issues that businesses faced last year were like they had never seen before. Issues such as significant downturn in business, supply chains affecting production, reduced cash flow have all contributed to disputes between employers and employees.
Some businesses will have gone into panic or survival mode and dealt with things in the wrong way and may now be paying the consequences. It is important to make sure you follow the correct processes so that if you have to terminate employment, you have done so in a way that you’ll be protected.
This doesn’t stop someone from pursuing a claim, it just means that they’re more likely to be unsuccessful if you’ve followed the correct route.
If you have any concerns or would like to discuss the Employment Law Update – February 2021 further, please get in contact with the HPC team today.
T: 0844 800 5932