New Post Brexit Employment Law Measures Announced

The Government has announced a number of employment law measures as part of its reforms designed to “cut red tape and grow the economy”. 

The measures include:

1. removing reporting requirements from the Working Time Regulations 1998, 
2. introducing a new exception from the application of the TUPE Regulations to smaller businesses, and 
3. limiting non-compete clauses to three months.

The employment law measures are set out in the policy paper ‘Smarter Regulation to Grow the Economy’, published by the Department for Business and Trade on 10 May 2023. The policy paper notes that the Government is taking the ‘opportunity to improve regulation following our departure from the EU’. The reforms, it states will ‘reduce unnecessary regulation for businesses, cutting costs and allowing them to compete‘ and ‘will create a more competitive and productive economy’. 

In relation to working time, the paper states that the Government will consult on removing retained EU case law that requires businesses to keep working time records for almost all members of the workforce. It also proposes re-introducing ‘rolled-up holiday pay’, and merging the separate ‘basic’ and ‘additional’ leave entitlements under the Working Time Regulations into one entitlement to annual leave of 5.6 weeks, while maintaining the same amount of leave entitlement overall. 

As regards TUPE, the Government will consult on removing the requirement to elect employee representatives for the purpose of TUPE consultation for businesses with fewer than 50 employees and transfers affecting less than 10 employees, freeing up businesses to consult directly with the affected employees.

Finally, on non-compete clauses, the paper notes that these can play an important role in protecting businesses who invest in their staff, but that unnecessarily burdensome clauses have become a default part of too many employment contracts. 

In the Government’s view, this can inhibit workers from looking for better paying roles, and limit the ability of businesses to compete and innovate. The Government therefore intends to legislate to limit the length of non-compete clauses to only three months. Giving up to 5 million UK workers more freedom. It will be interesting to see whether there is an exemption on the sale or transfer of a business. The announcement states that employers will still be able to rely on non-solicitation clauses (and, while not expressly mentioned, presumably other types of restrictive covenants such as non-deal and non-poaching covenants. Employers may wish to start now reviewing their contracts and deciding how best to prepare for these changes.

This legislation will be introduced ‘when Parliamentary time allows’.

Watch this space, but perhaps expect a long wait…