Dates for your diary: three key employment law changes

4 November 2020

Settlement payments for public sector employees

On 4 November 2020. The Restriction of Public Sector Exit Payment Regulations 2020 comes into force, which includes a public sector exit payment cap. The cap was designed to prevent large exit payments to "public sector fat cats", although bodies representing public sector workers expressed concerns that it could hurt lower-paid staff, especially those with long service.

The measures will prevent relevant authorities (capturing most of the public sector) from making exit payments in excess of the £95,000 cap. Various payments can count towards the exit payment cap, from redundancy payments to settlement of tribunal claims through ACAS (amongst others listed). While the regulations prohibit the relevant authority from making the payment, they do not alter the employee's entitlement to these payments. Some stakeholders have suggested this could lead to legal disputes.

More detail can be found here.

1 January 2021

Securing your post-Brexit immigration sponsorship licence

We are only three months away from the end of free movement of people, but with most businesses understandably consumed by the implications that COVID is having on their business, whether they are ready to recruit from overseas post January 2021 is a question that's never been more important.

From 1 January 2021, EU nationals arriving in the UK will be subject to the UK's new immigration points-based system. This means that there will be a "one size fits all" approach for hiring EU and non-EU nationals from this date. Whilst there will be some non-sponsored routes into the UK, from 1 January 2021, the main "skilled worker" route will require businesses to have a sponsorship licence in place before they can make an offer of employment to a non-British national. 

If you are not already a licensed sponsor and you think you will want to sponsor migrants through the new skilled worker route from January 2021, we recommend applying now.

More detail can be found here.

6 April 2021

IR35 for the private sector

The off-payroll rules apply if a worker (also known as a contractor) provides their services through their own limited company or another type of intermediary to a client organisation. The rules make sure that workers pay broadly the same tax and NI contributions as employees.

Following the postponement of IR35 earlier this year, the new changes will be coming in from the 6 April 2021. Prior to 6 April 2021, if the client organisation is in the public sector, they are responsible for determining if the off-payroll rules (IR35) apply, but if they are in the private sector it is the intermediary that has to decide. However, from 6 April 2021, all public sector authorities and medium to large sized private sector organisations will be responsible for deciding if the rules apply. Where the client organisation is a small private sector body, the intermediary will still decide and remain responsible.

The rules apply on a contract-by-contract basis so a worker may have some contracts which are captured by the rules, and some which are not. It is worth considering the implications of these rules now, in order to prepare properly for April 2021, which is only 6 months away.

You can read our previous article concerning IR35 in the private sector here.