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2021 – Issues and cases in employment law that will shape this coming year

The pandemic continues to dominate employment law forums, understandably, but we have picked out some of the other issues which are likely to be important boardroom topics during 2021. These are:

New immigration rules

From 1st January 2021, free movement with the EU ended and the UK introduced a new skills based immigration system.  Read more in our article about Hiring from the EU.


Originally due to take effect from 6 April 2020, changes to IR35 rules to bring the private sector into line with the obligations in the public sector will become effective from 6 April 2021. The new rules will affect medium and large businesses that use individual contractors, albeit small businesses will not be affected. To be eligible, an organisation must meet at least two of the below criteria:

  • have over 50 employees
  • have a net turnover in excess of £10.2m
  • have over £5.1m on their balance sheet

The IR35 rules apply where an individual (worker) personally performs services for another person (client), through an intermediary (usually a personal service company (PSC)). If the services were provided under a direct contract, the worker would be regarded for tax purposes as being employed by the client (known as ‘deemed employment’).

In the private sector it is the intermediary’s responsibility to determine whether there is ‘deemed employment’ and therefore whether IR35 applies. From 6 April 2021, the onus and responsibility for determining the correct status of the contractor will fall to the end user client, rather than the PSC. Further, responsibility for accounting for tax and national insurance will shift to the party which pays for the individual’s services (known as the ‘fee-payer’).


2021 has some significant cases (and/or with judgment awaited) on the near horizon:

  • Holiday type entitlement and pay

In 2019, the Court of Appeal in Northern Ireland in the case of Chief Constable of the Police Service of Northern Ireland and ors v Agnew held that the judgment in Bear Scotland was incorrect. Essentially, it found no difference between the recognised types of holiday (under EU Directive, Working Time Regulations and additional contractual holiday), nor, realistically, that they are taken in a particular order. This meant that over 3300 police officers and staff could recover around £40 million in underpaid holiday.

Of course, decisions of the Northern Irish Court of Appeal are not binding in England, Wales or Scotland. However, the employer in this case has appealed to the UK Supreme Court and the hearing will take place on 23 and 24 June 2021. The decision of the Supreme Court is binding on all UK employers, such that if the Supreme Court agrees with the NI Court of Appeal, workers will be able to recover underpayments going back up to 2 years.

  • Employment status – in particular the gig economy workers

The Supreme Court heard Uber’s appeal in Aslam v Uber BV and others on 21 and 22 July 2020. However, the judgment has yet to be published and when it is, it is hoped that there will be some useful guidance for determining whether self-employed contractors are instead workers and thereby entitled to some employment rights.

  • National minimum wage – in particular the rates of pay that apply to sleep in shifts

In Mencap v Tomlinson-Blake, the Court of Appeal said that under the National Minimum Wage Regulations, workers are either available for work or are actually working. Those who provide sleep-in cover are only available for work and, therefore, only have to be paid at appropriate NMW rates if they have to get up during the night to help a patient or do some other work. They do not have to be paid at NMW rates when they are in bed or resting.

The Supreme Court heard the case on 12–13 February 2020: judgment is still awaited.

  • Collective bargaining – can employers approach staff directly?

In Kostal UK Ltd v Dunkley and Others, the Court of Appeal held that trade unions with collective bargaining rights cannot prevent employers approaching staff directly to try to agree temporary changes to their terms and conditions of employment, in situations where collective negotiations have broken down. Prior to this, employers were typically back down in the face of opposition to even minor changes to implement contracts for fear of being liable to pay huge penalties.

The Supreme Court will hear the union’s appeal on 18 May 2021.

  • Equal pay

The case of Asda Stores Ltd v Brearley and others continues. The Supreme Court considered the preliminary issue of whether or not supermarket staff were able to compare their pay with that of the depot workers. The judgment is due sometime in 2021. A ruling in favour of the claimants (i.e. the workers) would mean that the case will be remitted to the employment tribunal to decide if the work is of equal value.