Insights

Employment Update February 2021

Posted Friday 19th February 2021

Coronavirus Job Retention Scheme (Furlough)

On 26 January 2021, the furlough scheme was officially extended until 30 April 2021. Much of this remains the same as previous guidance – employers are still able to claim 80% of a furloughed employee’s salary, up to a maximum of £2500, in respect of hours not worked.

HMRC are now publishing details of employers who claim under the scheme, with the first publication made on 26 January 2021. Employers can request that they are not included in this list, if they are eligible to do so (for example, there is a risk of violence or intimidation as a result).

As of December 2020, employers can no longer claim under the scheme for employees who have been given notice. This includes employees who have resigned or are retiring. Employees should ensure they account for this and make adjustments to any relevant claims.

Restrictive Covenants

Restrictive covenants are a common feature in employment contracts, most commonly in the form of non-solicitation and non-competition clauses. These are designed to protect the employer’s business interests and connections provided that they are reasonable and no wider than necessary.

A consultation on this area was launched in December 2020 and is due to close on 26 February 2021. In particular, views are sought on whether the enforceability of non-compete clauses should be further restricted (with the employer offering financial compensation for the entire duration of the clause) or potentially abolishing such clauses altogether. General views on restricting wider restrictive covenants has also been included.

Employers should ensure that they are aware of developments in this area throughout 2021 or they may risk relying on clauses in employment contracts that are no longer enforceable. It has yet to be clarified how this may impact existing restrictive covenants.

Exclusivity Clauses

A further consultation on exclusivity clauses in employment contracts is also underway, due to close on 26 February 2021. Views are sought on whether the restriction on clauses should be extended to employment contracts where the employee earns below the Lower Earning Limit (currently £120 a week), allowing them to seek additional work elsewhere. It is highly likely that this will be addressed quickly, given concerns that many employers have reduced offered hours throughout the pandemic and employees may need to boost their income.

Employers who may be impacted by this should ensure that they are aware of developments in this area. Such clauses may become unenforceable and lead to unfair dismissal claims/further compensation.

IR35

The postponed changes to off-payroll working rules is due to come into effect in April 2021, but employers should not delay in making their preparations for this. From this date, medium and large-sized organisations will be responsible for assessing whether IR35 applies to engaged contractors.

Employers should ensure that adequate internal processes are in place or they may risk unpleasant surprises in the form of future tax liabilities, late payment fines and further non-compliance penalties.

Further guidance is expected from HMRC in this respect throughout 2021.

For advice on employment issues, please contact Jennifer Maxwell-Harris or Reema Jethwa.


This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.


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