Employment law changes for 2021

Highfield HR highlight some of the key employment law changes to look out for in 2021.


The changes to the off-payroll tax legislation, IR35, will see the responsibility of assessing employment status of self-employed contractors shift to the organisation of whom they offer their services to. Medium to large companies will now be required to identify any self-employed contractors within their workforce and use the tools provided by the government to determine whether they are now required to deduct income tax and national insurance contributions when paying the contractor. These changes will take place on 6 April 2021.

See our latest IR35 blog post to find out more.

Increase and an extension of the National Living Wage (NLW)

The NLW will be increasing by 2.2% to £8.91, and for the first time we will see an extension to the age threshold for NLW to now include workers of 23 years and over. There will also be an increase to the National Minimum Wage (NMW) with hourly rates rising to:

  • £8.36 for workers aged 21 and 22
  • £6.56 for workers aged 18 to 20
  • £4.62 for workers aged 16 and 17

NLW and NMW will increase from 1 April 2021. Make sure you are prepared for these changes; it is important employers are paying their staff at least the NMW for their age category.

Increase of Statutory Pay (SP)

From 4 April 2021 the weekly rate of statutory maternity, paternity, adoption, shared parental, and parental bereavement pay will increase to £151.97. The weekly rate of statutory sick pay will also increase to £96.32 from 6 April 2021.

Employers must ensure their SP rates are in line with new rates of pay and any documentation that refers to SP are updated accordingly to reflect these changes.

EU Settlement Scheme

EU citizens resident in the UK have until 30 June 2021 to apply for the status required to remain in the UK after June 2021. The EU settlement scheme will allow successful applicants to be granted ‘settled or ‘pre-settled’ status, depending on how long they have lived in the UK.

It is important employers make sure that any of their EU workers that may fall under the criteria of the EU Settlement Scheme are aware of the actions they may need to take to ensure they do not miss out on the deadline for applying.

Coronavirus Job Retention Scheme (CJRS)

The CJRS was due to come to an end April 2021, however as many workers are expected to continue being unable to return to work until June, it was recently announced that the CJRS will be extended for a further five-months until 30September 2021.

Employers should note that the government will continue to fund 80% of an employee’s current salary for hours not worked under the scheme until June. From 1 July 2021 employers will be required to contribute towards the cost of unworked hours which is expected to look like the following…

  • July: 10% employer contribution
  • August - September: 20% employer contribution

If you would like further support on what 2021 changes in employment law might mean for your business or advice how you can prepare for changes email us today at info@highfieldhr.co.uk or call us on 01656 336097, we will be happy to help! 

Written by Highfield HR