UK Government announces raft of employment law proposals

The UK Government has announced its intention to introduce a raft of legislative and regulatory changes, some of which will affect employment law in the UK. Here, we discuss a few of the potential stand-out proposed amendments to familiar pieces of legislation.

In its ‘Smarter Regulation to Grow the Economy’ policy paper, the Government launched the ‘first in a series’ of upcoming regulatory reform announcements addressing the UK’s exit from the EU. The stated aims of these reforms are to improve regulation, reduce burdens, push down the cost of living, and drive economic growth. The employment law reforms are housed under the ‘reducing burdens’ heading.

Working Time Regulations

Proposed changes to the Working Time Regulations 1998 include:

• Removing the requirement for working hours records to be kept;
• Introducing ‘rolled-up’ holiday pay (a practice in which an employer pays an additional amount, intended to represent holiday pay, on top of an employee’s normal hourly pay rather than paying them at the time they take the holiday); and
• Merging ordinary and additional holiday entitlement into one (but keeping the same amount of leave entitlement overall i.e. 5.6 weeks – currently comprised of 4 weeks “ordinary” entitlement derived from EU law and 1.6 weeks “additional” entitlement derived from UK law)

TUPE

For the transfer of ownership of businesses, the Government also proposes simplifying the current requirements of the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations 2006 to remove the requirement to elect employee representatives for smaller organisations. This exemption will apply only to employers which have fewer than 50 employees and fewer than 10 transferees. In this scenario, employers will instead be able to engage with the affected employees directly.

Non-compete clauses

The Government announced its intention to legislate on this issue ‘when parliamentary time allows’. The proposed legislation will limit the length of any non-compete clause to 3 months after an employee leaves employment, allowing them to join a competitor or start a rival business after that period has elapsed. Currently, there is no statutory limit to such clauses, and their validity is considered on a case-by-case basis by courts. The Government state that this will give greater freedom to 5 million UK workers, but that the legislation will not interfere with employers’ use of notice periods, garden leave, non-solicitation or confidentiality clauses.

Retained EU Law (Revocation and Reform) Bill

Separately, in a written statement to Parliament, the Government announced that it is abandoning the ‘sunset clause’ (which automatically revokes any EU law not expressly retained or restated by the UK Government at the end of 2023). The rationale for this lies in the volume of retained EU law identified (around 4000 separate pieces of law) and the risks of legal uncertainty posed by sunsetting those laws without proper review – a point of criticism that has existed since the Bill was introduced.

This change effectively reverses the position in the Bill as introduced, meaning retained EU law will remain binding in the UK unless it is expressly repealed. The Government has released a list of EU-based statutory instruments it intends to repeal by the end of 2023. Very few of these are relevant to employment law and as a result, no significant changes are expected at the end of 2023.

This is a significant change to the previous proposals, in which key legislation such as TUPE, the Working Time Regulations 1998 and part-time/fixed-term workers’ protection would have disappeared if legislation had not specifically been introduced to retain them.

It will be clear that the status and content of these proposals are all subject to change. We will be keeping on top of any developments as and when they happen so keep an eye out for any further blogs from us on these topics.