The Government has announced several employment law changes, to be brought in as part of a series of regulatory reforms intended to boost economic growth and cut costs for businesses across the UK. These are set out in the ‘Smarter Regulation to Grow the Economy’ paper and are being driven in light of the UK’s departure from the EU.
The key proposed changes are as follows:
1. Working Time Regulations 1998 (‘WTR’)
- Removing retained EU case law which requires working time records to be kept for almost all members of the workforce (helping businesses save an estimated £1bn per year).
- Reducing the administrative burden and complexity of calculating holiday pay by:
- Introducing ‘rolled-up holiday pay’. This has technically been unlawful under EU law but will be significantly easier to implement (particularly for part-time and zero-hours workers), since it allows workers to receive an additional amount in each payslip to cover holiday pay, instead of receiving holiday pay only when annual leave is actually taken.
- Merging the separate ‘basic’ 4 week and ‘additional’ 1.6 week leave entitlements under the WTR into one 5.6 week entitlement to annual leave. This will eliminate the need to distinguish between the two different amounts and types of annual leave, which attract different rules.
The Government has launched a consultation on reforming these areas of the WTR because they place a disproportionate burden on business and are too complex to be easily understood and used by workers.
2. Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’)
- Removing the requirement to elect and consult with employee representatives for businesses with fewer than 50 people and TUPE transfers affecting less than 10 employees. This change will allow such businesses to consult directly with the affected employees, simplifying what can be a lengthy and complex election and TUPE consultation process and improving engagement with affected workers.
The Government consultation mentioned above also addresses these proposals to simplify the TUPE process.
3. Limiting Non-Compete Clauses
- Restricting the duration of non-compete restrictive covenants (which prevent an individual from working for or establishing a competing business after they move on from a job) to a maximum of three months.
Unnecessarily burdensome clauses have become a default in too many employment contracts. The reform intends to give workers greater freedom to switch to better paying jobs, boost the wider UK economy, and support employers by widening the talent pool and improving the quality of candidates they can hire.
The Government already carried out a consultation into the reform of post-termination non-compete clauses in contracts of employment from December 2020 to February 2021, and intends to introduce legislation ‘when Parliamentary time allows’. We therefore do not have a clear indication of when this change will be brought in.
This limitation of non-compete clauses will not interfere with the ability of employers to use paid notice periods or garden leave to restrict activities (since the three month limit will only apply to post-termination covenants), or to use other forms of restrictive covenants such as non-solicitation clauses.
The Government’s consultation on the proposed reforms to the WTR and TUPE consultations closes on 7 July 2023 and can be accessed here.
Nick Benton comments:
"The proposed reforms to the WTR and TUPE are likely to be welcomed by employers – and if employers want to give their views on this, they can respond to the Government’s consultation using the link above. However, limiting the duration of non-compete clauses may prove to be more controversial when employers are seeking to protect their businesses.”
If you have any questions or require any assistance on the proposed changes, please contact a member of the team here.