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What to expect in Employment Law in 2021

What to expect in Employment Law in 2021

2020 was quite a year for employers in respect of having to adapt quickly and efficiently in the face of effectively a national lockdown which prevented many businesses from running as normal. Whilst it is hopeful that, despite the unwelcomed circumstances surrounding the changes we faced in 2020, there has been a positive impact from these changes, employers will have to further consider their working practices in light of the below changes to employment law that 2021 will see come into force.


The coronavirus pandemic has put a number of things on hold that many of us cannot wait to have resume. However, one of those things is arguably not the IR35 legislation that was due to come into force in April 2020 but postponed to help businesses during the pandemic.  This is now going to come into force for the private sector in April 2021.

The IR35 legislation will mean that contractors do not have the right to determine their own tax status. Businesses, will instead be obligated to determine the employment status (and therefore tax status) of the individuals that they choose to engage with.

Employment Contracts

A further change to expect in 2021 is limitations that may be placed on the drafting of employment contracts. The Government is undergoing a consultation which considers whether or not non-compete clauses should be unenforceable atogether, meaning that some restrictive covenants that employers seek to use to restrict their employees activities post termination may no longer have any effect. The proposal will also consider whether, where determined to be enforceable, these clauses should only be enforceable for a prescribed period of time and only where an employer will provide compensation for an employee entering into such restrictions.

Further, the Government are considering alongside the non-compete clause within a contract, whether a clause which prohibits an employee working for another employer during their employment is reasonable. Clauses such as these, effectively prevent low paid workers from engaging in work for another employer, to increase their monthly salaries. The ban on these clauses being used in contracts is currently inforce for zero hour workers and consideration is being given to whether this should be extended to all workers who earn less than the Low Earnings Limit. 

Employment Bill

The Government are due to produce, over the course of this year, an Employment Bill that will contain multiple provisions to strengthen and widen the protections given to employees in the UK.

These provisions include:

  • The right for workers to request a more predictable contract, following on from the Taylor Review and Good Work Plan of 2019
  • Ensuring that all tips provided for workers go directly to them.
  • Allowing parents 12 weeks neonatal pay and leave, again following on from the Good Work Plan.

Perhaps, most notably, this Bill alongside the Pregnancy and Maternity (Redundancy) Protection Bill is set to increase the protections given to employees during pregnancy and maternity leave. It is a common misconception that employees who are pregnant or on maternity leave cannot be made redundant, however, this is not the case currently and making an individual who is pregnant or on maternity leave, redundant is acceptable in certain circumstances. However, if implemented the protections in this Bill will prohibit redundancy for those who are pregnant or on maternity leave for six months after their return to work. We expect that this will of course be subject to very specific exceptions.

Pay and Ethnicity Equality Reporting

During the pandemic, the need for large employers to produce gender pay gap numbers in 2020 was suspended, however in 2021 the requirement for these reports to be published will again resume for private sector employers on 4th April 2021.

The Equal Pay (Information and Claims) Bill is currently moving through Parliament and aims to reduce the gender pay gap threshold to include employers with 100 or more employees and also bring in ethnicity pay reporting alongside the pay gap reporting. This change will also see the a right for employees to know what their colleagues in similar roles are due to be paid.

New Normal Way of Working

The furlough scheme, having been extended multiple times, is set to come to a final close on 30 April 2021, although this may be subject to a further extension in the March budget as rumoured. There have been no further official announcements as of yet in respect of the intention of the Government to introduce any other job support scheme, however, we expect to see some discussions about this in the near future.

With the Covid-19 pandemic still ongoing and the requirement to work from home, where possible, still in place, it is likely that when the furlough scheme ends and employees begin to return to working full time there will be an expectation that employers will be flexible.

The Employment Bill mentioned above, has set out that the Government expect flexible working to be the default position across the board for all jobs. This will mean that employees in most roles will expect to work flexibly, which will be a huge change for most employers across the country.

Covid Vaccinations

Many employers are asking what they can do if their employees refuse to be vaccinated.  There is no legal obligation to be vaccinated and the Government stopped short of requiring this.  At the moment there is no evidence that vaccination stops the spread of the virus, rather the symptoms suffered tend to be less serious and reduce the risk of hospitalisation.

Pay in Lieu of Notice and Post Employment Notice Pay

For anyone having to calculate whether any pay of a termination payment is taxable as Post Employment Notice Pay, the calculation can be confusing and come up with some surprising results depending on whether contractual notice and the period over which pay in lieu of notice is expressed in months or weeks.  This should hopefully be simplified from 6 April 2021, as the Government has published draft legislation providing for the use of an alternative formula of using 30.42 instead of days in the pay period, where an employee is paid monthly but notice or the unexpired period of notice is not a whole month.  This also takes into account the anomaly that there are a different number of days each month. 

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About the author

Jillian McLaughlan
Jillian McLaughlan

Jillian McLaughlan

Senior Solicitor


For more information, contact Jillian McLaughlan or any member of the Employment team on 01382 723172.