Important post-Brexit employment law reforms just announced
The government announced yesterday (Wednesday 10 May 2023) a number of proposed post-Brexit reforms to UK employment law. They key proposals are:
Rolled up holiday pay to be allowed: Employers will be permitted to make ‘rolled up’ holiday payments – this is where employers add an uplift to normal salary payments to cover the holiday pay which staff are entitled to but then don’t pay that staff member anything when they actually take leave. This was declared to be unlawful back in 2006. However, allowing employers to adopt this system would make holiday pay calculations significantly easier for some categories of staff, such as casual or seasonal workers.
Non-compete clauses to be limited: Employers will be required to limit these to 3 months. This is likely to represent a very significant change for senior employees or those with particular client-facing or business development roles.
Wider TUPE exemptions for small employers: It is proposed that for employers with fewer than 50 employees and transfers of less than 10 employees, the onerous obligations to elect employee representatives for the purpose of TUPE consultation will be removed.
Working Time record keeping obligations reduced: Employers will no longer be required to keep such detailed records of working time for staff members.
Harmonisation of paid holiday categories: It is proposed that the distinction between ‘basic’ holiday pay (i.e. the 4 weeks’ minimum paid leave which comes from the EU Working Time Directive) and ‘additional’ (i.e. the extra 1.6 weeks’ paid leave which comes from UK legislation and which tops up holiday pay to 5.6 weeks, or 28 days per year for full time staff) will be removed. There will be a marginal increase in employee’s entitlements in some limited circumstances (for example employees on long-term sick will be likely to accrue holiday at the 5.6 week rate, rather than the lower 4 week rate at present), but these issues are likely to be outweighed by the simplification of many other holiday pay calculations.
In addition, rather than just repealing all EU laws (legislation, regulation and case law) at the end of this year as had been planned under the Brexit Revocation Bill, the government has said that it will announce which specific laws are being repealed by December 2023. Whilst this is helpful in the short term, the implications of this Bill for UK employment law, as well as many other areas of law which are driven by EU regulation, are enormous and it is still likely that we’re going to see some very uncertain times ahead.
What you should do now
As yet, these are proposals, not law. There is no current implementation date, instead the government will make changes ‘when parliamentary time allows’. This means that employers shouldn’t take any drastic action now, but it is also advisable not to introduce any procedural or contractual changes (for example to holiday pay or restrictive covenants) which could be excessive compared to the proposed legal position.
If you’re dealing with any of these areas and are uncertain about how best to proceed, contact Tiggy or a member of the Torque Law team to chat things through.