On 10 May 2023, the government announced proposals for change to retained EU employment law and their intention to make a significant change to the Retained EU Law (Revocation and Reform) Bill (‘the Bill’).

In this insight we summarise what this means for UK employment law and the impact for employers.

The proposals for change

The proposals are set out in the policy paper‘Smarter Regulation to Grow the Economy’. The paper notes that the government is taking the ‘opportunity to improve regulation following our departure from the EU’, while maintaining UK labour standards. The proposed changes, in summary, are:

• Working time – Removal of the requirement for employers to keep working time records for their workforce.
• Statutory holiday – Allowing ‘rolled-up holiday pay’ and merging ‘basic’ and ‘additional’ leave entitlements into one.
• TUPE – Removal of the requirement to elect employee representatives for the purpose of TUPE consultation for businesses with fewer than 50 employees and transfers affecting less than 10 employees, allowing businesses to consult directly with the affected employees.
• Non-compete clauses - Limiting the length of non-compete clauses to three months.

Retained EU Law (Revocation and Reform) Bill 

The Bill sets out the government’s proposals for moving forwards following the UKs departure from the EU, setting out which aspects of EU law will be retained and what will be removed. We prepared a summary and discussion of the original proposals under the Bill in our insight, The Retained EU Law (Revocation and Reform) Bill: What is it and what could it mean for employers?.

The government has now announced that the Bill will be amended to remove the most controversial element – the “sunset clause” (which would “turn off” the majority of (‘retained EU law’) REUL on 31 December 2023 unless positive steps are taken by the government to keep it or bring it back in). This means that REUL will remain binding in the UK unless it is expressly repealed. The sunset clause has been replaced with a schedule of approximately 600 items of REUL that the government intends to revoke on 31 December 2023. Any REUL that is not on that list will remain valid unless and until any further action is taken to revoke, amend, restate or replace it.

What to take away

it is not yet clear when (or if) the employment law changes proposed will be implemented. However, what is clear is that they will have a very limited impact on existing employment rights and business practices.

The removal of the sunset clause from the Bill is welcome as it removes one of the issues which was causing much legal uncertainty over large swathes of UK employment law. There are only three pieces of employment REUL in the Schedule –

• the Community Drivers’ Hours and Working Time (Road Tankers) (Temporary Exception) (Amendment) Regulations 2006
• the Posted Workers (Enforcement of Employment Rights) Regulations 2016
• the Posted Workers (Agency Workers) Regulations 2020.

However, in the longer term the government may well propose more substantial changes.

Notwithstanding the move away from the ‘sunset’ proposals, the government remains committed to removing principles governing how EU law and decisions of the EU Courts impact on UK employment law practice from UK law by 31 December 2023.

The House of Lords will debate the Bill (at the report stage) on 15 and 17 May 2023. The new proposals will be subject to further scrutiny at that stage and anticipate peers will insist that the government to publish impact assessments on the REUL being revoked by the Bill as a starting point.

How Capsticks can help

Paul McFarlane, Partner at Capsticks has been involved in the submission of evidence to Parliament in his capacity as Chair of the Employment Lawyers Association. For further information on the Bill or the proposed changes to employment law or advice on how they may affect your organisation, please contact Paul or Victoria Watson.