UK: Government announces plans for post-Brexit employment law reform

Update: On 12 May the Government published consultation documents including further details of the proposed reforms - see our post here.

The Secretary of State for the Department for Business and Trade, Kemi Badenoch MP, has today issued a written statement announcing that the Government will replace the current sunset in the Retained EU Law Bill with a list of the retained EU laws that it intends to revoke under the Bill at the end of 2023 (including only a few employment regulations concerning posted workers and temporary exceptions for road transport drivers' hours - see here). Other laws will remain on the statute books until there is time for proper assessment and consultation.  Our Beyond Brexit blog post covering this development is here.

Ms Badenoch MP has also announced that the first in a series of reform packages aimed at 'leveraging post-Brexit regulatory freedoms' will address employment law 'where there is an opportunity to improve regulation following our departure from the EU, whilst maintaining UK labour standards which are some of the highest in the world'.

The policy paper here sets out the following proposals; legislation will be introduced 'when Parliamentary time allows'.

Non-compete clauses

The Government proposes limiting the length of non-compete clauses to 3 months.  The policy paper states that this will not interfere with the ability of employers to use (paid) notice periods or garden leave, non-solicitation clauses or confidentiality clauses (though it does not mention non-dealing clauses).  This follows a consultation on a broader range of possible reforms in 2020-2021 (see our blog post here).  With so little detail available, there are considerably more questions than answers at this stage (for example, to what extent will it apply retrospectively to existing contracts, will garden leave have to be set-off against the 3 month period, will the Government prioritise pushing this reform through ...) - but it is certainly one to watch given the potentially very significant impact on employers in sectors where 6 or 12 month non-competes are market practice.

TUPE

Currently employers with no appropriate employee representatives can only inform and consult employees directly in relation to a TUPE transfer where they employ fewer than 10 employees in total. The Government will consult on broadening the exemption to small businesses (with fewer than 50 employees in total) and transfers affecting fewer than 10 employees.

Working Time Regulations

The Government intends to reform the Working Time Regulations this year and will be consulting on proposals to

• remove the requirement for employers to keep records of all individuals' working hours. This obligation is derived from EU case-law (see our blog post here); the UK regulations only expressly require 'adequate records' to show whether the weekly working time limits (save for those who have opted out) and night work limits are being complied with. We are not aware of the HSE having changed its enforcement approach to reflect the EU case-law, so many employers will not have changed their practice to reflect the case-law anyway, but reform would at least remove any concerns.
• reducing the administrative burden and complexity of calculating holiday pay by (i) introducing rolled-up holiday pay (another practice that some employers have continued to use on the basis that it was the most practical solution for atypical workers, despite being unlawful under EU case-law), and (ii) merging the current 4 weeks EU-derived annual leave entitlement with the additional 1.6 weeks statutory annual leave, presumably so that both types would be treated consistently in terms of pay in lieu, carry-over, etc.

To discuss the implications of these proposals further please do get in touch with your usual HSF contact.