At the beginning of May 2023, the UK government announced that instead of repealing all EU legislation not adopted by domestic law before 31 December 2023, that it would instead list 600 pieces of legislation that would be revoked, with the remainder of the EU legislation remaining in place, and not being repealed. Whilst this may appear to be a big change in policy this is likely to have minor impact on most businesses.
Alongside this, on 10 May 2023 the UK government published the ‘Smarter regulation to grow the economy’ policy paper. Since EU law is no longer binding in the UK, this paper looked at employment reforms aimed to reduce regulation and other burdens on British businesses, but with the aim of also maintaining high UK labour standards. So, what is the effect on your business? The full policy paper wording can be found here, but below is a guide to some of the expected headline employment changes which have been announced so far.
What will change for employers?
1. Working Time Regulations
There are some changes to the Working Time Regulations that the UK government have proposed implementing, as follows:
- The government proposes simplifying the calculation of holiday pay by merging the ordinary statutory holiday entitlement (4 weeks) with additional statutory holidays (1.6 weeks), to create one entitlement. We are still awaiting clarity on whether commission and overtime will be included in these calculations.
- The government has also said that they propose to allow rolled-up holiday pay, where hourly pay is topped-up with a payment for untaken holiday and the worker can receive their holiday pay with every payslip. While this is a helpful tool for employers, many have already been doing this because while technically unlawful, a worker’s remedy for such a breach is limited if the rolled-up element is shown clearly on payslips. This may, therefore, have little impact.
- The government aims to introduce a reform this year to reduce the time businesses take in recording the working hours of workers, under these Regulations.
2. Changes to collective consultation under The Transfer of Undertakings (Protection of Employment) (TUPE) Regulations
Whilst TUPE is valuable in protecting employees when the business they work for transfers to a new owner or when a service transfers to a new provider, it is complex. The proposals so far relate to simplifying consultation and changes could be made quickly as the proposals would not require primary legislation to be passed.
Currently, there is a requirement to elect employee representatives, to consult with employees prior to a TUPE transfer. Consultation cannot happen directly between an employer and individual employee. The government is looking at removing this requirement for businesses with fewer than 50 people when transferring fewer than 10 employees. There is already a micro-business exemption for business’ with fewer than 10 employees, so the changes would only effect a business with between 10 and 49 employees, where 9 or fewer are transferring, meaning this change can only apply where there is transfer of part and not all of a business.
3. Limiting non-compete clauses
It is common for employers to include post-termination restrictions (otherwise known as restrictive covenants) in employee contracts. However, government is focussing on non-compete clauses and their impact on a business’ ability to compete and innovate and are proposing that non-compete post-termination restrictions be restricted to 3 months from an employee’s end date of employment. This will not apply during notice periods or gardening leave periods and does not apply to non-solicitation clauses or confidentiality clauses. The policy does not specifically mention non-dealing clauses and so we will have to await clarification on that, but we do know the change will only relate to post-termination restrictions and will require primary legislation, so may take some time to come into force.
From the changes that have been announced so far, early indications are that the change in policy from having a sunset clause deadline by which time all EU legislation would be repealed if not expressly adopted, to now retaining any EU law not specifically repealed or adopted by 31 December 2023, is set to have little effect on UK business. The UK employment changes announced above are not substantial and whilst further changes may be announced the above are likely to be welcomed by employers but not significantly change many of their day-to-day practices. If you would like guidance as to any forthcoming changes in employment law or you have any questions about the Retained EU Law Bill, please contact our team of expert employment solicitors.