When people think of the year 2020, it would be plausible to state that the word ‘uncertainty’ springs to their minds. As Covid-19 (Coronavirus) spread and impacted individuals all over the world, employers and employees alike could not be sure what to expect.
In response to this, the government introduced a bundle of new measures to try to alleviate some of the pressures that were being experienced. We know that the Coronavirus Job Retention Scheme (CJRS) has been extended further, by a month, so that it is currently due to close at the end of April 2021, and we are also aware that the Budget will be held on 3 March 2021. What we do not know, however, at this point, is what the details of the Budget will be. This has a direct impact on organisations, as they do not have sufficient information available to them to establish what their potential pay strategies could be for 2021.
There is also the level of uncertainty surrounding the impact that Brexit will have, as there is currently no information relating to reciprocal social security arrangements with European Union (EU) countries, although we know a deal has been made with Ireland, which will have a massive impact on those UK employers that have employees working in the EU or European Economic Area (EEA), and similarly, on employers which send UK workers on secondment or post to work temporarily in an EU or EEA country.
These major factors will prevent employers from accurately budgeting and forecasting for 2021 and will leave business planning in a state of limbo. This element of uncertainty will linger until Chancellor of the Exchequer, Rishi Sunak, advises what the government’s plans for the future are, and how it intends to support the pay strategy of organisations and their employees for the year ahead.
Lora Murphy is a policy and research officer at the Chartered Institute of Payroll Professionals (CIPP).