The sunset of EU-derived law is cancelled, but there may be some reform of employment law

The Government’s Retained EU Law (Revocation and Reform) Bill originally (and controversially) provided that as at 31 December 2023 any EU-derived legislation would be revoked save to the extent that it had been expressly preserved.

On 10 May 2023, the Government announced a reversal of this approach. The situation now is that EU-derived law will remain in force unless it is expressly repealed by 31 December 2023.

This change in approach was because of what the government described as “the growing volume of retained EU law being identified and the risk of legal uncertainty.”It remains to be seen which particular elements of legislation will be expressly repealed by the end of this year, but the sense is that employment law will not now be significantly impacted.

At around the same time as announcing this reversal of the sunset of EU laws, the government did announce a consultation about two pieces of EU-derived law, which will be of importance to some UK employers if the proposed reforms are implemented:

• Working Time Regulations - It is proposed to:
  • Remove some of the record-keeping requirements
  • Permit rolled-up holiday pay
  • Merge the EU 4 weeks holiday and the UK additional 1.6 weeks holiday. The current difference between the two entitlements is that EU law applies to the 4 week entitlement, but not to the 1.6 weeks (and therefore EU case law on issues such as the inclusion of overtime and commission payments applies to 4 weeks holiday, but not 1.6 weeks). Having one entitlement of 5.6 weeks would make things simpler, although it is unclear how holiday pay would be required to be calculated for this unified entitlement.

• TUPE - It is proposed to:
  • Remove the requirement to consult with representatives for businesses with fewer than 50 employees or transfers involving fewer than 10 employees.

The Government has also commenced a consultation about:

• Reform to non-competition provisions in contracts of employment
  • Such provisions are currently enforceable insofar as they go no further than reasonably necessary to protect an employer’s legitimate business interests and typically range from 3 to 12 months. The government has stated that it intends to legislate to limit the length of non-competition clauses to 3 months, which it says "will give up to 5 million UK workers greater freedom to switch jobs, apply their skills elsewhere and even earn a pay rise”. The announcement states that employers will not be prevented from using paid notice periods or garden leave or non-solicitation clauses to protect their businesses.

None of the above reforms are guaranteed to happen, and immediate action by employers is probably not therefore required, but once the consultation processes have been concluded there should be more certainty about these reforms.

If you have any queries on this article, get in touch with Rena Magdani & Matt McBride.