Employment Briefing - October Update

• Real Living Wage increases
• Brexit and the EU Settlement scheme
• IR35 and off pay-roll working
• Section 1 Statements
• Job Support Scheme postponed
• Extension of the Furlough scheme

Welcome to October's Employment news briefing, providing a summary of some of the recent employment judgements.

If you have any questions about any of the topics covered, or would like to discuss anything with our Employment team, please call Martin Stephen on 0141 248 3434 or email mss@wjm.co.uk

Real Living Wage increases

The real living wage rate has increased by 20p to £9.50/hour across the UK and by 10p to £10.85/hour in London, as announced on 9 November 2020.

The real living wage is an hourly rate of pay calculated by the Living Wage Foundation charity based on what people need to live on, but is separate to the national living wage, which is a legal minimum rate set by the Government.

The real living wage is a scheme that employers can voluntarily sign up for to become living-wage accredited, meaning they pay all their workers at least the real living wage. Though the new living wage rates are already in effect from 9 November 2020 employers who are already part of the scheme have six months to bring in these pay rises.

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Brexit and the EU Settlement scheme

The UK left the EU on 31 January 2020 and, under the UK-EU withdrawal agreement, the Brexit transition period in place will end on 31 December 2020. However, come 1 January 2021 there will be a new immigration system in the UK. This system will be skills-based and points-based and apply to EU and non-EU citizens alike (subject to exceptions for those that qualify under the EU settlement scheme, having lived in the UK previously).

Once the Brexit transition period ends, migrants identified as ‘Skilled Workers’ wishing to relocate to the UK to live and work will have to evidence 70 points in the new points-based system. These points are awarded on the basis of:

- Having a job offer (20 points) from an “approved employer” at an “appropriate skill level” (20 points);
- Speaking English to an acceptable standard and to meet the maintenance requirements (10 points); and
- Meet the minimum salary threshold of £25,600 (20 points)

Despite the above requirements, some exceptions have been made. Those with job offers in “shortage occupations” including nursing and civil engineering can earn the extra points required, even if they are on lower salaries than the required amount. The minimum salary requirement for those with tradeable points is £20,480.

All UK businesses employing EU citizens from 2021 must apply for a Skilled Worker Licence. Businesses should consider whether they need to obtain a licence, bearing in mind the usual processing period is 8 weeks, but there are currently delays due to Covid-19. All current Tier 2 Sponsors will automatically, and free of charge be granted this new licence.

Employers with existing EU workers in the UK should ensure that their staff know what they should be doing to register under the EU Settlement Scheme.

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IR35 and off pay-roll working

The planned changes to IR35, extending off pay-roll working rules to the private sector, which were originally due to come into force in April this year were postponed until 6 April 2021. Though plans for off-payroll working rules may have been partially progressed earlier in the year, these should be dusted off and revisited ahead of this new date.

The off-payroll rules apply to payments made by public authorities and, now from 6 April 2021, medium and large private sector clients to intermediaries, where the nature and conditions of the engagement are such that the underlying worker would be classed as self-employed (for tax purposes), if the intermediary is ignored.

It will be the client's responsibility to assess the relationship between the client and the worker to determine if it would be one of employment or self-employment were it not for the intermediary. It will be necessary to assess existing contracts before the first payment is made after 6 April 2021, and issue "Status Determination Statements" before services are provided, ideally before the contract is signed as the outcome could have an impact on the intermediary's pricing. Failure to do so can result in the client being responsible for payroll and NIC deductions by default.

With 6 months to prepare, employers should review their contractor population and where they got to with each contractor's assessments, terms of which may well have changed depending on the impact of Covid-19 and the need for flexibility. Assessments made of contractor relationships may well be more complicated given the impact of new working environments and compulsory home working and therefore, it is more important than ever to understand the actual working arrangements for each contractor and engage with them on this early.

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Section 1 Statements

Under Section 1 of the Employment Rights Act 1996, employers are required to provide a “written statement of particulars” to new employees. Previously, they were required to provide this only to employees within the first two months of employment. However, since 6 April 2020 they are required to issue a written statement to both employees and to workers, by their start date.

This update may have been missed in the midst of the Coronavirus pandemic and related regulations which followed. However, at a time when businesses may not currently be hiring, it provides and opportunity for employers to review their contracts and ensure that they are fit for purpose for any prospective hires.

The April 6 2020 changes expand the points which need to be included in Section 1 statements, in addition to the current requirements in place, and these are as follows:
- any probationary period that applies, along with any probationary conditions;
- the days of the week the employee/worker is required to work and if the working days or hours will vary;
- any other paid leave that the employee/worker would be entitled to, and whether statutory schemes are used or enhanced schemes are in place (for example, for maternity, paternity, or shared parental leave);
- any other benefits provided; and
- any training that the employee/worker is expected to undertake as part of their role.

Employers should therefore ensure that their template statements of employment particulars have been updated to include the additional information that is now required.

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Job Support Scheme postponed

The Job Support Scheme was due to replace the furlough scheme from 1 November 2020. Given the furlough extension, the Job Support Scheme has been postponed, at least until the end of March.

In addition to this, the job retention bonus also no longer applies and appears unlikely to be reintroduced. The UK government has said that it will not pay the Job Retention Bonus in February, as had been planned, but that it will 'instead redeploy a retention incentive at the right time'.

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Extension of the Furlough scheme

As announced on 5 November 2020, the Coronavirus Job Retention Scheme (CJRS, the “furlough scheme”) has now been extended by the UK Government and this extension will be available from 1 November and run until 31 March 2021. Though the level of support will be subject to review in January.

From 1 November 2020 employers can claim 80% of an employee’s usual salary for any hours not worked, up to a maximum of £2,500 per month. This extension effectively reverts back to the original structure of the furlough scheme, where no contribution towards the 80% is required from employers, though they may choose to top this up. In addition, employers will still be required to make minimum pensions contributions and pay employer National Insurance Contributions on furlough payments.

The previous time limits to apply for the scheme have been updated and employers will be able to claim for any employee who was employed and on their PAYE payroll on 30 October 2020. Employers can also make use of the extended scheme even if they had not signed up previously.

An important update made following the scheme extension is the ability to re-hire employees who have been redundant or left employment and place them on furlough. If employees were made redundant, or otherwise stopped working for an employer, on or after 23 September 2020 they can be re-hired and placed on furlough. The employee in question must have been employed and on PAYE on or before 23 September 2020 and an (Real Time Information) RTI submission must have been made on their behalf between 20 March 2020 and this date. They do not have to have been previously furloughed to be rehired.

It is expected that further guidance will be published by the UK Government on the furlough scheme extension later in November.

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