Covid-19 & Employment Law: changes and postponements

Amid the ongoing COVID-19 crisis, scheduled Employment Law changes and reports have been postponed. The government have confirmed delays concerning IR35 and gender pay gap reporting. 

IR35

Reforms to the off-payroll IR35 regime due to be introduced this month have been delayed by one year in response to the COVID-19 pandemic. The legislation determining whether a contractor should be treated as an employee for tax purposes, is now expected to take effect on 6 April 2021.

In a statement on the evening of 17 March 2020 by Steve Barclay, Chief Secretary to the Treasury, stated in reference to the postponement:

“This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals. This is a deferral, not a cancellation, and the Government remain committed to reintroducing this policy to ensure that people who are working like employees, but through their own limited company, pay broadly the same tax as those employed directly.”

Gender pay gap reporting

The Government Equalities Office (GEO) and the Equality and Human Rights Commission announced on 24 March that they would be suspending the enforcement of the gender pay gap deadlines for this reporting year (2019/2020), due to the ongoing COVID-19 crisis.

The requirement for organisations with 250 or more employees to report annually on their gender pay gap figures will now not be expected. In a joint statement, Minister for Women & Equalities, Liz Truss and EHRC Chair, David Isaac said:

“We recognise that employers across the country are facing unprecedented uncertainty and pressure at this time. Because of this we feel it is only right to suspend enforcement of gender pay gap reporting this year.”

National minimum wage

There have been calls to delay the scheduled increase in the national living wage in light of the ongoing COVID-19 pandemic. The Institute of Fiscal Studies (IFS) (a well-respected think tank) has said that a postponement should be implemented to prevent struggling businesses from laying off workers. In a briefing note, the IFS said it was “extremely hard to believe” that the Low Pay Commission would have recommended the upcoming increase in rate had it known the implications of the ongoing crisis.

The government has made no suggestion that it intends to delay its plans to increase the national living wage this month. Instead, Rishi Sunak has announced support schemes for workers during the crisis, with the government covering 80% of the wages of those furloughed by their employers for an initial period of three months.

Carrying over holidays

The government has made an amendment to regulations regarding statutory annual leave entitlement amid the crisis. It has been announced that workers who have not taken all of their entitled annual leave due to COVID-19 will be allowed to carry over up to 4 weeks of unused leave into the next two years. Prior to the announcement of this amendment, the Working Time Regulations 1998 only allowed for 1.6 weeks' statutory leave to be carried over for up to a year.

There is therefore no obligation for employers to ensure that workers take their entitled leave in one year and failure to enforce such measures could result in a financial penalty.

Such measures introduced on 27 March 2020, ensure that staff can continue working throughout the COVID-19 crisis without losing their annual leave entitlement. Business Secretary Alok Sharma said:

“Whether it is in our hospitals, or our supermarkets, people are working around the clock to help our country deal with the coronavirus pandemic…Today’s changes will mean these valued employees do not lose out on the annual leave they are entitled to as a result of their efforts, and employers are not penalised.”

What do you need to be doing now?

Amongst the numerous new provisions employers must now be aware of, reforms to the IR35 regime and reporting on the gender pay gap can be put on the backburner for now. With that being said, it is still important for employers to be aware of their requirements in relation to these.

We are continually monitoring the developments and new provisions introduced by the government in response to COVID-19 and will provide regular updates on our bulletins, twitter feeds and via our monthly articles.  

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.