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Budget 2021 – What are the Employment Law Implications?

The Chancellor’s eagerly anticipated Budget has been announced this afternoon. The 3 main employment-related takeaways are:

  1. The furlough scheme will continue until September, with no change of terms. After July, businesses will be asked for a 10% contribution, rising to 20% in August and September.
  2. Support for the self-employed will also continue until September.
  3. The National Living Wage will rise to £8.91 from April.

The extension of the furlough scheme is likely to be welcome news to some employers, but for others it will be a frustrating development, tinged with the sentiment of “too little too late”. Employers have been dealing with an uncertain economic future for some time, and some will have already carried out extensive and potentially irreversible work involved with making  redundancies.  Indeed, prudent employers working towards the previous 31 March deadline could have concluded and made several employees redundant already, especially those larger employers who have been required to comply with collective consultation timelines which require consultation to take place more than 7 weeks in advance of the first redundancies being made. Sensible businesses operate on carefully calculated and thought through plans; the government’s repeated last-minute extensions serve little use to long-term business plans.

The extension of the SEISS scheme beyond April is excellent for those who have satisfied the eligibility criteria thus far. The number of individuals that do not satisfy the eligibility criteria remains troubling, however. Coupled with the amendments to IR35, which are still due to come into force in April 2021, unfortunately, the self-employed may be some of the hardest hit. Equally troubling is the continued lack of support measures targeted for working mothers, or mothers who have had to leave paid work as a result of increased childcare and schooling requirements. The disproportionate damage done to working mothers during the pandemic could be a setback for years.

If you are an employer and would like to discuss the implications of the Budget on your business or have any other questions arising from this alert, or for specific legal advice on particular circumstances, please contact our Partner Merrill April who specialises in employment and partnership issues for multinational employers, senior executives, partnerships and partners.