May 2023 saw proposals for major changes to employment law, designed to ‘boost the economy’ through ‘smarter regulation’. In this article, two of our employment solicitors Mel McCrum and Elizabeth Maxwell look into the detail of these proposals.
The government’s announcement follows the UK’s withdrawal from the EU and marks a reversal of the controversial ‘sunset clause’ (Retained EU Law (Revocation and Reform) Bill), which provided that all EU law would be automatically revoked on 31 December 2023 unless expressly retained. Instead, the current laws will remain binding except for those listed in the proposed Bill as being expressly repealed – Currently, 600 pieces of legislation will be revoked once the Bill is enacted.
Regulations to be retained
The government has repeated the assurances extending back to Theresa May’s premiership that it is not intending to weaken workers’ rights and that the vast majority of retained EU employment law will be preserved including the following:
- Maternity and Parental Leave etc Regulations 1999 (SI 1999/3312).
- Paternity and Adoption Leave etc Regulations 2002 (SI 2002/2788).
- Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551).
- Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034).
- The Agency Workers Regulations 2010 (SI 2010/93).
- Information and Consultation of Employees Regulations 2004 (SI 2004/3426).
- Transnational Information and Consultation of Employees Regulations 1999 (SI 1999/3323).
- WTR 1998 and the TUPE regulations (with the exception of the particular issues which are the subject of this consultation).
Regulations to be revoked
The handful of (relatively obscure) regulations listed below have been deemed no longer necessary or relevant as a result of the UK’s departure from the EU. These regulations will be revoked:
- The Posted Workers (Enforcement of Employment Rights) Regulations 2016 (SI 2016/539).
- The Posted Workers (Agency Workers) Regulations 2020 (SI 2020/384).
- The European Cooperative Society (Involvement of Employees) Regulations 2006 (SI 2006/2059).
Regulations to be amended
Hot off the government’s agenda for reform are the following:
- Working Time Regulations
- Removing the requirement for employers to keep working time records for their workforce (even though in practice this is rarely adhered to, or checked)
- Merging ‘normal’ holiday leave and pay (4 weeks) and ‘additional’ holiday (1.6 weeks) to create one single entitlement of 5.6 weeks each year which could potentially lead to calculations for holiday pay being made without commission, bonuses, overtime etc.
- Allowing ‘rolled up’ holiday pay (i.e. allowing holiday pay to be included or ‘rolled up’ in basic pay)..The government is proposing allowing rolled-up holiday pay to be paid at 12.07% of pay, as this is the proportion of statutory annual leave in relation to the working weeks of each year (statutory annual leave entitlement is 12.07% of hours worked by a worker). Introducing rolled-up holiday pay would ensure that workers with irregular hours receive their holiday pay regularly and up front.
- TUPE (Transfer of Undertakings (Protection of Employment) Regulations2006))
Always controversial regulations given the difficulties with interpretation and implementation. There was therefore some surprise that the changes proposed did not go further. Instead the proposed new reform is limited to removing the requirement (where there is no existing recognised Trade Union) to have to elect employee representatives with whom to inform and consult for businesses with fewer than 50 employees or transfers from businesses with more than 50 employees but which only involve less than 10 employees.
Ultimately this is going to apply to a minority of businesses and may be more relevant to transfers of parts of a business rather than the undertaking as a whole. Nevertheless, it will allow businesses to consult directly with the affected employees, hopefully making the process much less bureaucratic and cumbersome.
- Non-compete clauses
Following the completion of a recent consultation exercise into post-termination provisions generally (which were previously governed only by common law (case law) rather than any Legislation) the Government have now announced they are looking at limiting the length of post-termination non-compete clauses to three months.
This is particularly useful for employees who may have entered into contracts preventing them from working for a competitor for periods which can extend up to 12 months from the date their employment ended.
We still do not know for certain precisely which of these reforms will feature in any final legislation to be enacted, or exactly when they will take effect though It is anticipated that some of the changes will be made by the end of 2023.
The announcement marks the first step in the changes to ‘boost the economy’ through ‘smarter regulation’ and employers will no doubt welcome a reduction on some of the burdens they’ve faced under existing laws and regulations.
Our employment team are here to help your business with any questions following Brexit and can be contacted on [email protected]