Proposed Brexit Changes to Employment Law

Following the UK’s departure from the European Union, and the end of the ‘transition period’ on 31 December 2020, the Government has announced its proposals for the future of retained EU law. Following an announcement on 10 May 2023, EU law will now remain binding on the UK unless it is expressly repealed before 31 December 2023.

For more detail on the future of EU law in the UK more generally, please follow the link to our article on the Retained EU Law (Revocation and Reform Bill) which is currently passing through Parliament.

The Government has set out a provisional list of approximately 600 laws that they are intending to repeal, including three sets of regulations that will impact upon the employment sphere.

Whilst it is currently only intended that three pieces of employment law will be revoked, the Government has proposed to amend two noteworthy pieces of employment legislation.

Firstly, the Government intends to remove retained EU case law that require employers to keep records of employees’ working hours.  This is a reference to the European Court of Justice’s ruling in a 2019 Spanish case (CCOO v Deutsche Bank), in which the ECJ confirmed that employers must set up a system enabling the measurement of the duration of time worked each day by each worker.  It has never been clear whether, or the extent to which, this case applied to UK employers.  Currently the UK Working Time Regulations just require employers to keep ‘adequate records’ to show whether certain limits and requirements set out in the Regulations are complied with, and for these records to be retained for two years.

The removal of the present requirement for record-keeping will provide some certainty on the legal position for UK employers and may remove a burdensome requirement. However employers should note that there are other requirements to keep records of working hours that will be staying, such as in the minimum wages rules.

The Government has proposed some changes in respect of holiday leave and pay. Firstly, it intends to merge ‘normal’ holiday leave with ‘additional’ holiday leave, to create one single entitlement to 5.6 weeks annual leave that is governed by a single set of rules. This has not been specifically set out, but this change may result in the calculation of holiday pay reverting to the old method (which excludes overtime and commission). We will have to wait and see on this.

The Government also intends to allow ‘rolled up’ holiday pay. This is a practice whereby the employer pays an employee an additional amount on top of their normal hourly rate of pay, with the additional amount intended to represent holiday pay instead of the employee taking time off.  This has been technically unlawful under EU law for many years, but is now set to change.  We expect this will be welcomed by employers of casual staff or of those who only work for part of the year.

The other proposed changes are to the TUPE Regulations. Currently, other than for businesses with fewer than 10 employees, there is a requirement to elect employee representatives for consultation on a TUPE transfer where representatives are not already in place. However, the Government now intends to introduce some flexibility.

For businesses with fewer than 50 employees, and for transfers affecting less than 10 employees, it will now be possible to inform and consult directly with affected employees where no representatives are in place. In practice, this is not likely to be particularly relevant to many businesses, given the exemption is set to apply to fairly small businesses, but nonetheless will provide some more flexibility and reflect what often happens in practice anyway.

The consultation on these proposed reforms closes on 7 July 2023. Therefore, the full detail of these changes and the proposed timescales will only be known when the Government responds to the consultation. In the meantime, businesses should consider how the proposed changes may impact them in the future, and put in place any appropriate measures to ensure compliance.