Government Announces there will be no sunset-strip! But do changes to holiday pay and TUPE transfers signal a new dawn?

What’s new?

You may have read our previous blog Sunset Strip- Forecast for Employers: FfE news for the year ahead in employment law: | Just People (justpeoplehr.com) about government plans to “sunset” (in less romantic terms ‘get rid of’) all employment and health and safety legislation derived from the EU by the end of 2023.  That’s more than 2,500 EU regulations including those affecting employment rights in relation to:

• working time and holidays,
• discrimination,
• TUPE,
• agency workers,
• part-time workers,
• fixed-term employees, and
• new parents. 

The snappily titled Retained EU Law (Revocation and Reform) Bill automatically revoked almost all EU law at the end of 2023, unless a statutory instrument was passed to preserve it. Meaning that new legislation would have to be introduced before the 31 December 2023 deadline in order to retain many existing employment protections in those areas listed.

We concluded the blog by saying, “we may never see this Bill make it to the statute books”. And we were right!

On 10 May 2023, the government announced, in a written statement to parliament from the Business and Trade Secretary Kemi Badenoch, that it is abandoning the sunset clause in the Retained EU Law (Revocation and Reform) Bill. Ms Badenoch has subsequently been criticised by Tory MPs for what they see as a “massive climbdown” resulting from “civil service idleness or a lack of ministerial drive”. Many businesses and conservation groups have welcomed the row back and Ms Badenoch commented that she had “to be responsible and look at what we can make sure is deliverable”. Given the task before her, the current U-turn is hardly surprising. “If I am upsetting people on both sides, I’m probably taking the pragmatic middle ground and I’m very pleased to be doing so,” she said.

Why it’s important?

So, the position is now reversed, and EU law will remain binding in the UK unless it is expressly repealed.  The Bill has been amended to contain a list of the retained EU laws that the government intends to revoke on 31 December 2023 - but anything not on that list will remain valid. The only ones relevant to employment law are so obscure as to be irrelevant for most employers. So, it’s business as usual. Or is it?

The approach now appears to be to tackle legislative change on a piece-by-piece approach rather than losing everything all in one go. Given the lack of time for proper parliamentary debate and the necessary steps needed to implement legislation onto the statute books, putting the brakes on legal reform is likely to be welcomed by employers and employees alike, for the sake of legal certainty if nothing else. The Bill still contains powers for the government to continue to amend EU laws, so more complex regulations can still be revoked or reformed after proper assessment and consultation. 

As part of this drive for deregulation, Ms Badenoch announced that the government will make improvements to employment law which could help save organisations around £1 billion a year, while safeguarding the rights of workers. She emphasised that the government would consult on cutting unnecessary red tape on recording working hours, streamline consultation requirements with workers on a TUPE transfer, and provide up to 5 million UK workers greater freedom to switch jobs by limiting non-compete clauses.

What next?

It seems employment law reform is under the government spotlight, so watch this space for updates on the latest developments.

Firstly, you may have read our previous blog on the government consultation which closed on (9 March this year) regarding its intention to amend the Working Time Regulations to make the law around holiday pay for permanent workers easier to understand and implement! This would allow employers to pro-rate a worker's holiday entitlement to reflect the number of days/weeks they actually work each year owing to the “unfair outcome” in Harpur Trust v Brazel. The proposed change is to introduce a 52 week holiday reference period for part-year workers and those with irregular hours, including those weeks when they don’t actually work, and allow employers to use a mathematical short-cut to work out their entitlement based on 12.07% of the number of hours they work. Familiar we know, but U-turns seem to be something we are all going to have to get used to. This change would only require secondary legislation by way of amendment to the Working Time Regulations and could be introduced fairly swiftly, possibly by the end of this year.

Secondly, and most significantly, on 10 May 2023 the government announced the first of a series of reform packages each focusing on specific areas of regulation. This first package addresses employment law where it says there is an opportunity to improve regulation following the UK’s departure from the EU, whilst maintaining UK labour standards which are some of the highest in the world. The proposed reforms are to the:

1. Working Time Regulations - Reducing the administrative burden and complexity of calculating holiday pay by:

1. Removing the requirement for record-keeping under the Working Time Regulations for working hours.  Although this legislation has hardly been the inspiration for record-keeping!
2. Merging the current two separate leave entitlements into one pot of statutory annual leave, while maintaining the same amount of statutory leave entitlement overall Although the government does not say this, this may result in the calculation of holiday pay reverting to the old method (i.e. excluding commission, overtime etc); and
3. Introducing rolled-up holiday pay, so that workers can receive their holiday pay with every payslip. This has been technically unlawful under EU law for some years, although the remedy for breach is limited if the rolled-up element is shown clearly on payslips.
4. See above regarding rectifying the mischief of Harpur Trust v Brazel for permanent part-year workers.

2. TUPE Regulations – Reducing the administrative burden employment without changing employee rights by simplifying the regulations as follows:

1. Removing the requirement to consult with appointed representatives when there are fewer than 50 employees in the organisation and fewer than 10 transferees. This is of limited impact, because of the existing micro-business exemption (meaning that consultation wasn’t required for businesses with fewer than 10 employees).  So this means that where an organisation has between 10 and 49 employees, of whom 9 or fewer are transferring, they will also be exempted from the collective consultation rules.  In reality, this can only apply where there is transfer of part of an organisation, not the entire organisation.

Conclusion:

Despite Jacob Rees-Mogg’s jibe at Kemi Badenoch, the government appears to be getting into gear and driving forwards some legislative change before the next election in 2024. Employment law being at the forefront of their agenda. So far, the changes appear to be limited and not the sudden sunsetting of EU derived laws that had been proposed. Watch this space for further updates on these reforms and any new proposals.

If you have any questions on this or any other employment law issue, please don’t hesitate to contact a member of the team here at JustPeople.

 01768 216775

 getintouch@justpeoplehr.com