Government U-turn on the “sunset” of retained EU law by the end of 2023

The Government has announced that it will no longer be automatically repealing all retained EU law in the UK at the end of 2023. Instead, it will be selectively changing certain areas of employment law. 

The Government previously introduced the Retained EU Law (Revocation and Reform) Bill, which proposed removing all EU law from the UK statute books through a “sunset” provision. Unless the Government expressly said otherwise, any retained EU law would be repealed. We wrote about this Bill previously here. 

What areas of employment law will be changed?

The “sunset” provision in the Bill is no more; instead, the Government have proposed the following changes:

1. Removing the need for employers to record working hours for workers, as employers are currently required to keep an accurate record of time worked by their workers under the Working Time Regulations 1998 (WTR). 
2. Simplifying the calculation of holiday pay by introducing rolled-up holiday pay, which is the practice of including holiday pay in workers’ rates of pay. This is a practice which is currently prevented by EU case law as being incompatible with the EU Working Time Directive (WTD).
3. Merging the two separate holiday leave entitlements which exist in UK law, which are 4 weeks derived from the WTD and 1.6 weeks from the WTR. This would leave a singular “pot” of 5.6 weeks’ statutory annual leave for workers.
4. Amending the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) by removing the requirement for businesses with fewer than 50 people with transfers affecting less than ten employees to elect new employee representatives. This would allow businesses to consult directly with affected employees. 
5. Limiting the scope of non-compete clauses by restricting the length of any non-compete clauses to three months. It says it will introduce legislation to make this change when Parliamentary time allows. 

Comment

Out of all the announced changes, the introduction of rolled-up holiday pay will be a welcome change for employers who engage casual workers, as it will likely greatly simplify the management of holidays for such workers. The proposed amendments to TUPE may well make the sale of part of businesses a more straightforward process, but whether this will be a major change remains to be seen, depending on the detail of the proposed change.

The headline that will likely have caused some alarm for employers is the limitation of the scope of non-compete clauses to just three months. Although this doesn’t appear to affect the scope of other post-termination restrictions that employers would normally rely on, such as non-solicitation of, or non-dealing with, key customers or confidentiality clauses, this change could give rise to concerns for the employment of senior or skilled employees where they could leave to work for a competing business.

The Government’s announcement was accompanied by a policy paper, which sets out the changes in very broad terms. At this stage, we only have the headlines of the changes, so we will have to see how matters develop, and it seems there may be further changes yet to come. 

For support and advice on any of the issues covered in this article, contact Craig Harvey on 0191 211 7824 or [email protected]