UK: Government's plans to 'sunset' retained EU law could have significant impact on employment law

The Government has laid the Retained EU Law (Revocation and Reform) Bill in Parliament.  This could theoretically lead to significant changes in key areas of employment law discussed below, although the government's plans in this regard remain unknown and therefore there is little employers can do to prepare at the moment.

In order to avoid leaving gaps in the UK legal system when the UK withdrew from the EU, the body of EU law in force at the end of 2020 was imported into UK law, and the UK legislation that implemented EU law was retained, under the European Union (Withdrawal) Act 2018 (with necessary amendments). This body of law is called “retained EU law”.

If passed as drafted, the Bill will:

• Sunset retained EU law – sunset the majority of retained EU law so that it expires on 31st December 2023, unless specifically preserved. Before that date, the Government will need to review every piece of retained EU Law to determine which should be retained. In the employment context, this includes the regulations concerning TUPE, working time, part-time workers, fixed-term employees, and agency workers, as well as the directly effective equal pay rights under the EU Treaty (although rights under the Equality Act should be unaffected).  Employers face a period of uncertainty until the Government confirms whether it plans to preserve and/or amend these laws. The Bill includes an extension mechanism for the sunset of specified pieces of retained EU law until 23 June 2026 should it be required;
• Modification of retained EU law – make it easier to amend retained EU law. The Bill will give ministers powers to amend retained EU law by secondary legislation;
• End the supremacy of retained EU law – reverse the current situation that retained direct EU legislation takes priority over domestic UK legislation passed prior to Brexit (where they are incompatible); and
• Departure from EU caselaw – give the UK courts greater discretion to depart from the body of retained EU case law.  Again, this will give rise to the potential for significant changes in established employment caselaw and therefore increase uncertainty for employers.

In determining the extent of any employment law changes, the Government will need to bear in mind the Trade and Cooperation Agreement agreed between the UK and the EU.  This includes level playing field provisions covering labour standards and provides for sanctions if current rights are weakened or UK and EU labour laws diverge significantly - but only if trade or investment is affected.

The Bill will now proceed through the Parliamentary scrutiny and voting processes, and may become law by the end of this year.