Government announces post-Brexit changes to employment law

On Wednesday, 10 May, the Government announced a U-turn on the sunset provisions in the Retained EU Law (Revocation and Reform) Bill, which would, if passed into law, have repealed all retained EU law from the statute books at the end of 2023 save for any laws expressly retained. Retained EU law will now continue in force unless the Government specifically legislates to repeal or amend it. The Government has therefore proposed a number of legislative changes to EU-derived employment law.

Working Time Regulations 1998 (WTR)

• The Government intends to reverse the prohibition on rolled-up holiday pay. Rolled-up holiday pay is prohibited under EU law on the basis that it discourages employees from taking holiday, but this reform will likely be welcomed by UK employers who employ casual or short-term workers for whom calculation of holiday pay can become an administrative burden.
• The four weeks’ leave governed by EU rules and the additional 1.6 weeks’ leave governed by domestic rules leave under the WTR will be combined into one entitlement and presumably governed by the same rules when it comes to calculation of holiday pay.
• Under the WTR employers have technically been required to record the number of hours worked by employees to ensure that they do not exceed the 48-hour per week limit. The majority of employers were likely unaware of this requirement as there has never been any strict enforcement but the Government nonetheless plans are to withdraw it.

Transfer of Undertaking (Protection of Employment) Regulations 2006 (TUPE)

• Businesses with fewer than 50 employees undergoing a sale or outsourcing that results in the transfer of less than ten employees will no longer have to consult with elected employee representatives, but can instead consult directly with affected employees. There is already a “micro-business” exemption under existing law that applies to employers with fewer than ten employees, but this change will mean that slightly larger employers will also benefit from the exemption.

Unrelated to EU law, but with the similar intention of encouraging a more competitive and innovative economy, the Government has announced that it will restrict the duration of non-compete clauses in employment contracts to a maximum of three months.

The EU law-related reforms may be made relatively quickly whereas the restriction on non-compete clauses requires primary legislation and so will be made “when Parliamentary time allows”.