What is on your HR agenda for the year? In part one of our preview, we took a look at the elephants in the room of COVID-19 pandemic and Brexit.

Here in part two, our Employment, Labour & Equalities team look beyond those elephants to the key 2021 legislative changes and awaited court judgments from cases heard in 2020 that should be on your radar.

Later in part three, we look at the upcoming 2021 appeals to note.

The 2021 key legislative developments and awaited court judgments

The COVID-19 pandemic has affected all aspects of life with employment law being no exception. On the legislative front, some 2020 proposed changes were postponed until this year. As for the courts, while some hearings took place remotely, inevitably the pandemic has caused delay with some key judgments expected in 2020, to now be handed down in 2021.

  1. National Minimum Wage: (1) April rate increases (2) sleep-in shifts
  2. Gender Pay Gap Reporting & Equal Pay: (1) GPGR for 2020 data (2) equal pay comparators
  3. Employment status: (1) taxation - IR35 (2), 'worker' status (3) more 'worker' status
  4. Family friendly: (1) April rate increases, (2)the Employment Bill

1. National Minimum Wage (NMW)

NMW April 2021 rate increases

The annual increase to NMW hourly rates including the national living wage (NLW) takes place on 1 April and will see an increase from £8.72 to £8.91. This year the NLW age band is also being increased. It will apply not only to those aged 25 and over, but is extended to those aged 23 and 24 as well.

Getting NMW payments correct is important. Employers who get it wrong for any (including inadvertent) reason face HMRC enforcement, including penalties and 'naming and shaming'.

For the full list of the rate increases and additional important points to note see, National Minimum Wage April increases: the 2021 small print.

Sleep-in shifts: Royal Mencap Society v Tomlinson-Blake

Where a worker is required to work a number of 'sleep-in' night shifts at the employer's premises and be available in case of an emergency, does the full night shift constitute 'working' for the purposes of the NMW? Alternatively, is the worker only 'working' for NMW payment purposes when they are awake to carry out any relevant duties?

Prior to 2018, a number of Employment Appeal Tribunal (EAT) judgments held many workers were 'working' the entire sleep-in shift even when sleeping. The EAT judgments had significant implications for many care providers. Not only did many employers need to adjust their pay arrangements going forward, they faced significant back-pay claims as well as potential HMRC enforcement notices. Indeed, HMRC in November 2017 introduced the Social Care Compliance Scheme (SCCS) to facilitate a solution to the issue of historic NMW underpayments for sleep-in shifts

In one of the most controversial employment law cases of 2018, the Court of Appeal overturned the numerous Employment Appeal Tribunal (EAT) judgments to rule that the only time that counts during sleep-in shifts for NMW purposes is the time when the worker is required to be awake for the purpose of working (Sleeping on the job take two: National minimum wage and 'sleep-in' shifts).

This surprise Court of Appeal judgment had a huge impact on the care sector. Care providers working on small margins concerned about staffing costs and their back pay liabilities were relieved, while often low paid sleep-in workers were disappointed.

The Supreme Court heard the appeal back on 12 and 13 February 2020, with the now well overdue judgment expected any time now.

2. Gender Pay Gap Reporting (GPGR) & Equal Pay

GPGR for 2020 data

After a 12-month suspension due to the coronavirus pandemic, gender pay gap reporting is back.

Employers with 250 or more employees will be required to report their 2020 gender pay gap data (that is, data calculated using the snapshot date of 5 April 2020, or 30 March 2020 for public sector bodies) by 4 April 2021 (30 March 2021 for public sector bodies), following the one-off suspension of the requirements relating to the data for the 2019 reporting period.

Calculations will be complicated this year, and next, due to employees being furloughed under the CJRS. In December 2020, the Government Equalities Office published guidance confirming that furloughed employees should not be counted as 'full-pay relevant employees' on the snapshot date for the calculations relating to mean and median hourly rates of pay, and the proportion of male and female employees in each quartile. However, they would be included in the calculation of the gender bonus gap (which includes all relevant employees). As such, it may be 2023 or later before we get a clear indication on the direction of travel on tackling the gender pay gap, as well as the impact of the pandemic on the gap.

Equal pay comparators: Brierley v Asda Stores Ltd

Most of the large supermarkets are in the grips of large-scale equal pay claims with predominantly female retail shop floor employees seeking to compare themselves with predominantly male distribution depot employees.

Can private employers avoid equal pay claims through corporate structures that physically separate female-dominated and male-dominated workforces? In 2019, the Court of Appeal confirmed that common terms can apply as between two separate establishments (a store and a depot) not only where they apply to actual employees in the relevant classes working there but also where they would apply, even if the claimant's class of employee would never in practice be employed at the comparator's establishment (and vice versa). For example, an in-store check-out assistant would be paid the same even if she was hypothetically based at a distribution depot (it doesn't matter that you would never have a check-out assistant based at a depot). For both the retail staff and the distribution staff, Asda applied common terms and conditions wherever they worked and so the female retail staff can compare themselves with the male distribution staff. In addition, the fact that the Asda Executive Board was ultimately responsible for pay across the two groups also satisfied the "single source" test under EU law. See 'Employment Essentials - February 2019'.

On 14 and 15 July 2020, the Supreme Court considered this comparator point. Judgment is eagerly awaited.

3. Employment status

Taxation - IR35 (off-payroll working)

Delayed from last year due to the pandemic, from 6 April 2021, existing public sector restrictions and rules on IR35 (workers providing services through intermediaries) will be extended to medium and large private sector organisations. The purpose of the IR35 rules is to prevent the avoidance or reduction of tax and National Insurance contributions by the interposition of an intermediary between a client and worker. Under the controversial change to the rules, instead of the contractor having responsibility for determining their employment status for tax purposes, the client or hirer will need to make the call. They could be liable for any missing tax if they get the decision wrong. See IR35 private sector reform: Get ready for April changes.

'Worker' status: Uber BV and ors v Aslam and ors

This long-running case has become the poster-child for gig economy worker status cases. Back in December 2018, the Court of Appeal upheld the findings to date that Uber drivers are 'workers' entitled to national minimum wage (NMW), paid annual leave and whistleblowing protection, but only by a majority. A dissenting judgment in favour of independent contractor status suggested all was still to play for with a further appeal surely on the cards.

The Supreme Court considered the tricky issue of 'worker' status for employment law purposes on 22 and 23 July 2020. This eagerly awaited judgment will be handed down on 19 February 2021.

Will the Supreme Court agree with the majority of the Court of Appeal that much of the contractual documentation could be disregarded, as it did not reflect the reality of the agreed working relationship? Or,, as held by the minority, did the contractual documentation reflect the, albeit unfairly disadvantageous, reality of what the parties agreed?

This now overdue judgment will have important implications for a number of other 'gig economy' employment status cases pending before the tribunals, EAT and Court of Appeal.

'Worker' status No 2: The Independent Workers Union of Great Britain (IWGB) v The Central Arbitration Committee (CAC)

Also look out for the Court of Appeal judgment in the Deliveroo case concerning trade union recognition. While most claims to establish worker status have been brought via the well-trodden tribunal route, Deliveroo riders, instead sought union recognition via the CAC for which you need to be a worker. A 'cunning plan' using a potentially quicker and cheaper route to establish 'worker' status. The CAC rejected the union recognition application on behalf of Deliveroo couriers as it determined that the riders, known as 'roos', were self-employed. Critically, the CAC concluded there was a genuine substitution clause that meant roos did not undertake to do personally any work. The Court of Appeal heard the union's appeal on 2 February 2021, with judgment expected in the spring.

See 'Uber drivers are "workers" but Deliveroo riders are not - what's the difference?'

4. Family friendly

Statutory Pay Rates annual April 2021 increases

The April 2021 annual increase to statutory payments are:

  • Statutory maternity, paternity, adoption and shared parental pay will be £151.97 (up from £151.20).
  • Statutory sick pay weekly rate will be £96.35 (up from £95.85).

Employment Bill

We should get the details of the now overdue Employment Bill as announced in the December 2019 Queen's Speech, which is expected, amongst other things, to introduce redundancy protection for pregnant employees.

Currently, if a woman's role is made redundant while she is on maternity leave, she is entitled to be offered suitable alternative employment by her employer or associated employer if such a vacancy exists. Essentially, she has priority over other employees whose role is made redundant at the same time. This priority period will be extended at both ends. It is proposed that the period will start from the point at which a woman notifies her employer that she is pregnant and extended by an additional six months after she has returned to work.

Also expected to be introduced under the Bill are paid neonatal leave and unpaid carer's leave.