In September 2022, the Government presented the Retained EU Law (Revocation and Reform) Bill (‘the Bill’) to Parliament. We summarise what this may mean for the UK employment law and the potential impact for employers below.

The proposals for change

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.

If approved as drafted, the new legislation will:

• “Sunset” or “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 (as long as this is done before the long-stop date of 23 June 2026 - 10 years from the date of the Brexit referendum).
• Give ministers the power to revoke, amend, restate or replace REUL.
• End the supremacy of REUL over domestic UK law passed prior to Brexit (where they are incompatible).
• Give UK courts the discretion to depart from previous REUL case law.

Points to Note

Some legal commentators have noted that the Bill provides an opportunity to improve and clarify the parts of EU derived employment law that cause employers (and workers) the biggest issues (for example, the Working Time Regulations).

The bill is seen as controversial and, as it stands, is seen as creating legal uncertainty and lack of clarity in terms of its long-term impact. Some key areas for consideration are: -

Legal uncertainty 

The ‘sunset clause’ is unprecedented and will introduce uncertainty and ambiguity in the law. It has attracted considerable external criticism from academics, business groups, trade unions and third sector organisations, including many legal commentators.

There is currently no definitive figure or list of the legislation that could form part of REUL. The initial list published by the Government on 22 June 2022 identified just over 2,400 pieces of REUL across 300 unique policy areas and 21 sectors of the UK economy. However, after a review by the National Archives, a further 1,400 pieces of REUL were identified in January 2023.

The Government appears to be set on keeping the 31 December 2023 sunset date but, as yet, has not given any indication of which pieces of REUL they intend to keep, amend or remove. As a result, employers, employees and their representatives remain unclear on what the position will be in respect of key pieces of employment legislation after the sunset date.

Reduced Parliamentary scrutiny / oversight

The Bill grants power to ministers to review and make decisions on affected legislation with little scrutiny and oversight from Parliament. Ministers will be able to unilaterally make decisions that could reshape long-standing legal protections and powers that derive from REUL. Parliament will have no say in the matter.

In terms of employment rights, this will affect Transfer of Undertakings (Protection of Employment) regulations (TUPE), the right to paid holiday pay, the 48 hour working week, rights of part time, fixed term and agency workers and the right to equal pay, among many more.

No detailed understanding of the impact

The Government's independent Regulatory Policy Committee has criticised the government's impact assessment (‘IA’) on the Bill, describing it as "not fit for purpose”, finding that:

• “The quality of different analytical areas in the IA are all either weak or very weak, meaning that they provide inadequate support for decision-making.”
• “The IA was also red-rated on its assessment of the impacts on small and micro businesses.”
• “No impacts for changes to individual pieces of REUL have been assessed at this stage.”
• “Those affected by regulatory change should reasonably expect the Government to properly consider the impacts of such changes.”
• “We are not assured that the impact of changing or sunsetting each piece of REUL will be calculated or understood under proposals currently in place - particularly where no related secondary legislation is required.”

Unintended consequences

With approximately 4,000 pieces of legislation that could form part of REUL, there are significant concerns that government departments will not have the time or resources to consider the implications of the Bill fully for each and every one of them.

Given the scope of the task they face, the deadline of 31 December 2023 is considered wholly unrealistic and almost impossible to meet. A rushed and uncertain process may result in poor decision-making. It risks losing legislation or principles developed through case law that have been ingrained in UK law over the course of many years.

Further, it is not yet certain that all the REUL’s in scope have been identified. This creates a real risk of law being revoked by accident on the sunset date with no preparation for the consequences.

Current status of the Bill and likely next steps

The Bill is currently proceeding though the Parliamentary scrutiny and voting processes and it has some way to go before it becomes law. However, in theory, it could become law by June 2023.

The House of Lords committee stage concluded on 8 March 2023 after five days of debate. The House of Lords was critical of every element of the Bill and saw the government defending its position. The Bill passed committee stage without significant amendment, with peers stating that, at the report stage, they would consider pushing votes on extending the sunset date and increasing the level of parliamentary scrutiny of the review process. The report stage is due to commence on 19 April 2023. After the third reading in the House of Lords, the Bill will then return to the House of Commons for consideration of the amendments made.

The general rule is that all Bills have to be passed by both the House of Commons and the House of Lords except in certain circumstances. However, the House of Lords cannot ‘veto’ the Bill. If the House of Lords disagrees with this Bill, it can delay its introduction. However, the House of Commons can then reintroduce the Bill in the following session of parliament and pass it without the Lords' consent. This would delay the sunset date past 31 December 2023, but would not prevent it from becoming law.

What to take away

If the Bill does come into force this year as planned by the Government, we expect to see a significant amount of new legislation being introduced in November and December 2023. Either way, at the time of writing, no one knows for sure what UK employment law (and what the rights and obligations will be in place - on things like holiday pay, working time, parental rights, holiday, transfer of undertakings (TUPE) and health and safety - to name a few) will look like in 2024 and beyond.

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 advice on how it may affect your organisation, please contact Paul or Victoria Watson.