Under the Retained EU Law (Revocation and Reform) Bill, the government was proposing to repeal most retained EU law at the end of 2023. That has resulted in great uncertainty about which aspects of employment law, much of which is EU-derived, would be preserved.
That uncertainty has now receded, after the government announced a change of approach. Instead of sunsetting retained EU law unless a conscious decision was taken to preserve it, the government will now produce a list of the legislation that will be revoked. This will give businesses much greater certainty about the legal framework that will apply in 2024.
However, the government is still keen to use its Brexit-related freedoms to ensure that regulation is necessary and proportionate. Given that desire, it has announced three reforms to employment law that are intended to boost the UK economy while maintaining UK labour standards.
Working time
The government will consult on three changes to the Working Time Regulations:
- Reducing record keeping requirements, which it estimates will save businesses £1bn per year;
- Permitting rolled up holiday pay; and
- Merging the basic and additional elements of annual leave into a single entitlement.
TUPE
The government will also consult on allowing employers to consult about TUPE transfers with employees directly instead of through elected employee representatives in some circumstances. This change will only be relevant to employers with fewer than 50 employees/ where under 10 staff are transferred. It is not entirely clear from the announcement whether both requirements would need to be met for the exception to apply.
Employee competition
The most significant change for many employers will be the announcement that in future non-compete clauses will have a maximum duration of three months. Although this is not a Brexit-related change, it reflects the policy objective of boosting the UK economy by fostering innovation.
Employers will still be able to prevent employees from competing during their notice or garden leave. There will be no restriction on the duration of non-solicitation covenants – the existing rules on what is reasonable to protect a legitimate business interest will continue to apply.
Next steps
The reforms will not come into force immediately. Consultation will take place on the working time and TUPE changes and primary legislation will be needed to implement the restrictions on non-competes. It is not clear when parliamentary time for this will be available.
In terms of the overall significance of the reforms, the TUPE changes are at best peripheral. The reintroduction of rolled-up holiday pay will be helpful for managing annual leave for platform and casual workers. However, it is not clear how much of a burden record keeping requirements actually are in the UK, notwithstanding the government’s view that EU requirements are “time-consuming and disproportionate”.
Employers will be most concerned about the limit on the period of non-compete protection. Once the full details of the reform are known, they will need to review their employment contracts. In particular, employers may want to consider increasing some employee notice periods to maximise the available period of protection against competition.
