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Proposed changes to the post-Brexit employment law landscape: how much 'red tape' will disappear?

This week, the government published a policy paper which explains the steps it will take to reduce red tape and allow businesses to get on with the job of growing the economy. The paper repeats a lot of the, so called, "Brexit benefits" we've grown accustomed to, such as allowing the government to 're-think how and when' to introduce regulations, and give it the opportunity to 'rid the statute book of unnecessary and burdensome retained EU laws'. 

So, which unnecessary and burdensome EU laws does it have its sights? If this policy paper is anything to go by, the government's ambitions are a lot less radical (but certainly more realistic) than its rhetoric suggests.

It's got two regulations in its cross-hairs: the Working Time Regulations and the Transfer of Undertakings (Protection of Employment) Regulations. It's third proposal relates to restrictive covenants, and the principles around enforcement, which aren't anything to do with EU red tape anyway.

Working Time Regulations

1. Record keeping

The government plans to abolish the requirement for businesses to record the working hours of every member of staff. It says that this will save businesses £1 billion each year. 

The regulations, as currently drafted, require employers to keep 'adequate' records to show that their staff are not working in excess of 48 hours a week', and the rules around the number of hours worked by young people, and those working nights, are complied with. Records have to be kept for at least two years, and are enforced by the Health and Safety Executive. However, the HSE have always taken a fairly relaxed approach to this, and have said that employers don't need specific records for most types of workers, and can rely on other data (such as pay data required under the NMW Regulations). I'd therefore be surprised if this change will result in the bounty the government predicts.

2. Rolled up holiday pay

To reduce the administrative burden and complexity of calculating holiday pay, the government will allow employers to roll-up holiday pay, provided the employee is aware of this and the precise calculations are set out in their pay slip.

That will be welcome news to many employers, particularly as the law (as it currently stands) is somewhat ambiguous. The EU made it very clear that rolled up holiday was unlawful, and government guidance reinforced this message. But, a decision of the Employment Appeal Tribunal, some years ago, indicated that employers who did roll-up holiday in this way could offset these payments against their liability for holiday pay - provided they had complied with several steps, one of which was to set out in the detail in the contract of employment and/or pay slip.  

3. Merging holiday

The government doesn't have any plans to reduce the 5.6 weeks minimum holiday workers are entitled to receive. Currently, this is made up of four weeks' leave under Regulation 13 and 1.6 week's 'additional' leave under Regulation 13A. Instead it plans to merge these so that there is just one type of leave. 

It's not entirely clear why it thinks this will reduce administrative burdens on business. Most employers don't treat leave and additional leave any differently, unless the employee is on long-term sick and it wants to restrict carry over of untaken holiday from one leave year to the next, or it wants to limit holiday pay to basic pay after the first four weeks leave.  

The government has said that it will consult on this soon and intends to implement its plans this year.

4. Holiday entitlement of term-time and casual workers

The policy paper doesn't refer to the government's plans to allow employers to pro-rate holiday for term-time and casual workers, and to simplify calculating holiday pay. It consulted on this in January 2023, but has not yet published its response. [You can read our thoughts on the plan here.]

Transfer of Undertakings (Protection of Employment) Regulations

These regulations are amongst the most complex and rigid employment laws in force. [I have a friend who voted for Brexit largely because of her experience of dealing with TUPE transfers as a business lead - she was particularly vexed by the fact that she couldn't harmonise the terms of conditions of newly acquired staff to help reduce the administrative burden on her business]. 

She'll be disappointed by the government's proposals. It isn't going to make any changes to alter the fundamental rights of staff to retain their existing terms and conditions of employment post transfer. Instead, it's going to make it easier for small employers to consult directly with their staff if they don't already have employee representatives in place. This exemption will only apply to employers with fewer than 50 employees, and transfers affecting fewer than 10 employees. A similar exemption already applies to businesses with fewer than 10 employees.

The government hasn't set out a timescale when this change may take effect. 

Restrictive covenants

The government has had a bee in its bonnet about non-compete clauses for years. In 2014, it commissioned a report which recommended that non-compete clauses in contracts of employment should be banned on the basis that they act as a barrier to workers starting up their own businesses. Then in 2020, It consulted on measures to reform post-termination non-compete clauses. It's taken almost three years to respond to that consultation. 

It has rejected some of its initial proposals (such as forcing employers to compensate staff if they wanted to hold them to their post-termination restrictions). Instead it has decided to limit the length of non-compete clauses to three months. The government predicts that this will give, up to five million workers, the freedom to switch jobs quickly.

This change will only apply to non-compete clauses which restrict an individual's ability to work for, or establish, a competing business when they leave a job. Employers will still be able to use paid notice periods, garden leave, and non-solicitation clauses to protect their business interests.

The government hasn't set out a timescale when this change may take effect. 

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