Are you aware of these employment rule changes starting on 1st July?

Wednesday June 23, 2021

For many people, July is a time when attention turns to summer holidays, for slowing down a little and enjoying the warm weather. For obvious reasons that is less so this year, and actually as an employer there are a couple of significant rule changes that you’ll need to get your head around. Sorry, please don’t shoot the messenger!

Right to work

The first relates to your obligations when taking on new hires. For everyone, you need to go through a right to work check to establish whether they are allowed to work in the UK. There are heavy penalties of up to £20,000 per illegal employee if you get this wrong. Due to Brexit transition periods and the pandemic, the rules around these have been phased in over a longer period than originally intended. As of 1st July, though, they come into force in full.

For UK nationals (and, note, Irish nationals too), it is relatively straightforward to check the right to work. You still need to do a robust inspection of an original official document like a passport (scrutinising whether photos and dates of birth tally etc.), taking a good quality copy and keeping records, but that is sufficient.

However, for all foreign nationals (other than the Irish) a combination of some or all of the following schemes come into play to determine their immigration status:

  • The EU Settlement Scheme
  • The points-based immigration system
  • Employer sponsorship

EU Settlement scheme

Let’s start with the EU Settlement Scheme. This applies to EU nationals who started living in the UK prior to 31st December 2020. They had the opportunity to register before 30th June 2021 for either settled or pre-settled status. This gives them a number of rights depending on how long they had been in the UK, including an automatic right to work. As of June, 5.4 million people had registered with the scheme.

It is an individual’s responsibility to have done this, and not any of your business as an employer, other than as part of the confirmation that it gives you that they have a right to work in the UK.

Points-based immigration system

Every foreign national who does not have settled or pre-settled status, whether EU or otherwise, is subject to the new points-based immigration system. This sees points awarded for characteristics like education level, fluency of English, and salary. A threshold of 70 points must be reached to qualify for a right to work.

There are several fast-track schemes that run alongside this, including for students, graduates, skilled workers, seasonal workers and specialist occupations.

Employer sponsorship and the checking of a right to work for foreign nationals

If you choose to employ foreign nationals other than settled/pre-settled EU citizens and Irish citizens, you will need to go through a sponsorship process. This costs £536 per employee for smaller companies and £1,476 for larger companies. It typically takes weeks to gain the licence, so plan ahead!

Candidates who have had to actively gain a satisfactory immigration status through the points system or settlement scheme may provide you with a share code which enables you to do your employer checks electronically, direct with the government. If they do not provide this, you will have to conduct the same robust physical checks of documents that we described earlier for UK and Irish nationals.

Tips on hiring foreign nationals

As you can see, there is something of a right-to-work maze to navigate when hiring now, so it is essential to be fully informed. Here are some further pointers:

  • You must follow the right to work process properly. Even if you are duped into hiring someone who did not have a right to work, demonstrating that you followed the process can be a defence from incurring a penalty which can extend to £20,000 per illegal employee.
  • It is immigration status, not nationality, that you are checking.
  • Ensure you implement right to work checks consistently and fairly. Changing your process for people with differing characteristics could expose you to a discrimination claim.
  • Keep excellent records – they will be what you rely on if something goes wrong.
  • Give yourself time – some of these processes take weeks, so make sure you start far enough in advance to comply with all the rules.

Changes to furlough

We mentioned that there were two rule changes coming in on 1st July, and the other concerns furlough. Far be it for anyone to say that furlough is simple, but this change is a little quicker to explain than “right to work”. It does, though, relate to a greater cost burden falling on you if you are using the furlough scheme.

With the scheme already extended to September, we will see a tiered reduction of the amount of money the government will pay, starting on 1st July.

Currently, as you’ll know, for hours not worked the government will pay 80% of an employee’s salary up to £2,500 per month. You’ll have paid the employer contribution for National Insurance and pensions and it was up to you if you wanted to top up the salary beyond 80%.

From 1st July, the government contribution will drop to 70% and to qualify for this you will have to pay 10%, up to £312.50 per month alongside the NI and pension contributions. So in total your employees will still receive 80% of salary for hours not worked. You are, again, free to top this up to 100% at your own cost if you wish.

For August and September the government will drop their contribution to 60%, with your burden rising to a minimum of 20%, up to £625 per month.

Advice Line at your service

So it is potentially a busy month ahead for employers. Our Advice Line clients have unlimited telephone and email support on such matters, delivered by their local HR Dept office. If you would like to find out more about this service to help you prevent people problems, please give us a call.


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