Government Changes

The government has published a paper? which announces that, amongst other things, it will consult on proposals

• to remove EU-derived obligations to keep records of working time.
• to simplify calculating holiday pay.
• to allow businesses to inform and consult the workforce directly about TUPE transfers if they don't have representatives in place, where the employee has fewer than 50 employees and the transfer affects fewer than 10 of them.

The announcement comes at the same time as the government is abandoning its proposed default repeal of all retained EU law in favour of a more limited repeal.

Working time records

The government intends to consult on working time reporting and other administrative obligations under the Working Time Regulations (WTR) 1998. It believes that the current rules place unfair burdens on businesses.

These proposals would include removing retained EU case law which requires employers to record daily working hours, including overtime, worked by employees. This case was decided under the EU Charter of Fundamental Rights and the Working Time Directive. Currently, the UK's Working Time Regulations require only that employers keep and maintain "adequate" records to demonstrate that they are complying with rules on maximum working hours and protections for night workers.

Simplifying calculation of statutory holiday pay

The government proposes to simplify statutory holiday pay calculation, subject to consultation. It identifies two particular measures.

The first is to allow rolled-up holiday pay. Paying holiday pay in this way is a fairly common feature for zero-hours workers who, due to the nature of their working patterns, sometimes don't designate days specifically as annual leave. Rolled-up holiday pay was held to be unlawful several years ago, but amounts clearly identified and paid as such could be offset against any potential liabilities. This has meant that many organisations have continued to use rolled-up holiday pay, due to its administrative convenience, and the lack of a practical alternative.

The second identified measure is to merge the two types of statutory holiday entitlement. A worker's overall statutory entitlement is to 5.6 weeks of leave (28 days for a full-time worker). Four weeks of that entitlement comes from the EU Working Time Directive. The additional 1.6 weeks was granted as a purely UK entitlement. Different rules have built up over time relating to how to calculate statutory holiday pay for the two types of leave, as well as in relation to the right (or lack thereof) to carry leave over to the next holiday year. The paper is silent on which set of rules would be retained. It remains to be seen whether the government will identify any other measures for simplifying holiday pay.

Relaxing TUPE consultation requirements for small businesses

The government will consult on allowing small businesses (employing fewer than 50 people with the TUPE transfer affecting less than 10 employees) to consult directly with affected employees. Currently, unless the employer falls within the scope of a micro-business, they must consult with employee representatives on the TUPE transfer.

Limiting post termination non-compete restrictions to three months

The government is planning to legislate, when parliamentary time allows, to limit the length of post termination non-compete clauses in the employment context to three months. The government does not believe that this will affect an employer’s ability to use paid notice periods, gardening leave or other post-termination restrictions such as non-solicitation clauses. Back in 2020, the government ran a consultation on measures to reform post-termination restrictions in contracts of employment. The consultation closed on 26 February 2021 but the government has not published its response. It is unclear whether the current proposal is intended to take over?the earlier consultation.

Retained EU Law (Revocation and Reform) Bill (REUL Bill)

The government's much championed REUL Bill would have seen all EU-derived subordinate legislation effectively abolished by the end of this year by default, unless it was specifically retained. The number of affected pieces of legislation was estimated to be in the region of 4,000. The Bill allowed the government to extend, exempt or keep affected legislation, but the default position was that it would disappear from the UK statute book.

The government has now acknowledged the widespread criticism of this sunset mechanism and will replace it with a mechanism whereby only expressly listed legislation will be revoked.

It remains to be seen whether any items of employment legislation will make it onto the list of rules to be revoked. However, the government's announcements on TUPE consultation and working time rules suggest that TUPE and the WTR 1998 will be retained.

Aside from the scrapping of the sunset mechanism, the REUL Bill could still be significant for employment law in other ways. The Bill will do away with any remnants of the old principle of the supremacy of EU law as well as "general principles of EU law". In addition, the Bill effectively seeks to encourage UK courts and tribunals to stop and really think whether they should continue to follow any European Court of Justice (ECJ) case law, or domestic case law that applied ECJ case law. One area of employment law that has seen frequent ECJ interventions is the entitlement to paid annual leave.