Key Employment Law Changes in 2021

Extension of the Furlough Scheme

The furlough scheme remains an option for eligible organisations and staff until the end of September 2021. However, changes as to how the scheme is funded commenced from the 1 July 2021 when employer contributions to wages will begin at a rate of 10%. The government will contribute 70% towards staff wages. In August and September, employer contributions will rise to 20%. The government will contribute the remaining 60% towards staff wages. 

National Minimum Wage

Millions of workers in the UK received an increase in pay from April 2021 following a rise in the National Minimum Wage (NMW) and the National Living Wage (NLW). 

The rate rises include a 2.2% increase in the NLW, which is the equivalent of £345 extra per year for a full-time worker. More young people have become eligible for the NLW, as the age threshold was lowered from 25 to 23, meaning that the NLW has become the statutory minimum wage for workers aged 23 and over. Make sure your employee’s pay are in line with these new rates.

Category                            Rate from April 2020          Rate from April 2021  Increase

National Living Wage                               £8.72                          £8.91                     2.2%

21-22 Year Rate                                       £8.20                          £8.36                     2.0%

18-20 Year Rate                                       £6.45                          £6.56                     1.7%

16-17 Year Rate                                       £4.55                          £4.62                     1.5%

Apprentice Rate                                       £4.15                          £4.30                     3.6%

Accommodation Offset                           £8.20                          £8.36                     2.0%


Employment Bill

In December 2019, the Queen’s speech heralded a number of proposed pieces of legislation. Some of these may have been overtaken by the events of the last nine months, but the key ones for 2021 are: 

Extension to redundancy protections to prevent pregnancy/maternity discrimination
There is a popular myth that you cannot make those on maternity leave redundant. This is not correct. While you must not make them redundant because they are on maternity leave, you must treat all employees fairly and equally, which means including those on maternity leave in a pool with colleagues. However, if they are selected for redundancy while on maternity leave then a woman has enhanced rights to be placed into a vacant role for which they have the skills without competitive interview. The government intends to extend that protection for six months after the woman returns from maternity leave.

Introducing an entitlement to one week’s leave for unpaid carers
In March 2020, the government issued a consultation paper and asked for responses by 3 August 2020. In this paper they proposed allowing unpaid carers to have an additional one week unpaid leave a year. The response to this consultation has not yet been published.

Allowing parents to take extended leave for neonatal care
Following consultation in 2019, the government published a response in March 2020 confirming that parents of babies that are admitted into hospital as a neonate (28 days old or fewer) will be eligible for neonatal leave and pay if the admission lasts for a continuous period of seven days or more. They will be entitled to this from day one of their employment and up to a maximum of 12 weeks. There have been no further details published, including the level of the neonatal pay.

Making flexible working the default unless employers have a good reason not to
This proposal, introduced in 2019 under the flexible working bill by Conservative MP Helen Whately, failed to complete its passage through parliament by the end of the session, which means it will not progress. However, although the Queen announced that legislation would be implemented to give effect to this, it is likely to have been overtaken by the events in recent months. All employers have been forced to look at whether their employees can work from home, with some having to juggle childcare as well as do their jobs, and a lot of myths and preconceived ideas have been firmly put to rest. 

A new, single enforcement body for employment rights
Consultation closed in October 2019 and as yet no further details have been published, but the intention is to have one body enforcing minimum wage, unpaid tribunal awards and the tribunal penalty scheme, regulating statutory sick pay and publicising employment rights. 

Passing legislation to ensure tips left for workers go to them in full
Specially referred to in the Queen’s speech, this would implement the Employment (Allocation of Tips) Bill.

A new right for all workers to request a more ‘predictable’ contract
No details have yet been published, but this is to address the perceived imbalance of zero-hours contracts.