In its policy paper titled Smarter Regulation to Grow the Economy, the Government has outlined a part of its vision for employment law post-Brexit. In the words of Kemi Badenoch, the plan is to “tackle the red tape that holds back UK firms” and give businesses “the freedom to do what they do best – sell innovative products, create jobs and grow the economy”.
This comes on the back of a mostly welcome (and widely predicted) rollback of the sunset clause contained within the Retained EU law (Revocation and Reform) Bill as originally envisaged; a clause that would have seen retained EU legislation be revoked en masse if not otherwise explicitly retained or replaced by the end of 2023. This seems like a sensible approach. We are only six months or so from the projected D-Day with growing uncertainty amongst lawyers, employers, and workers – at least, until now. Indeed, only three rarely-used sets of regulations will now be repealed. So, what will be changed as part of the Government’s bold vision?
Working Time Regulations
First among the proposed changes is a series of amendments to the Working Time Regulations (“WTR”), which implement the Working Time Directive (93/104/EC) (“EWTD”).
The Government intends to axe “time-consuming and disproportionate” record-keeping obligations for businesses in so far as these relate to working hours. Regulation 9 of the WTR compels employers to keep a record of the daily working hours of their staff. This is intended to ensure compliance with the limit on a working week (48 hours a week on average over a reference period). However, this is also a massive administrative undertaking and not one which many employers do in practice. The new policy paper predicts that scrapping these obligations will save UK businesses an ambitious £1bn per year, though it is notably silent as to how compliance will be measured going forward.
The Government has also announced its intention to “reduce the administrative burden and complexity of calculating holiday pay” – and rightly so. If you’re an employer, or if you work in HR or employment law, the words ‘holiday pay’ are probably enough to make you break out in a cold sweat – or at the very least roll your eyes. The need for reform has become abundantly clear in the aftermath of Harpur Trust v Brazel. Indeed, the Government is already consulting on how best to reform holiday pay insofar as it applies to casual workers. They have now announced plans to re-introduce “rolled-up holiday pay”, a practice which was extremely useful in industries with high numbers of atypical employees, such as care and manufacturing, and which was made unlawful following a decision of the ECJ. In addition, the Government intends to merge the two separate annual leave entitlements in to one pot of statutory minimum annual leave, without altering the amount of leave.
TUPE
Briefly, the Transfer of Undertakings (Protection of Employment) (“TUPE”) Regulations protect the rights of employees when the work they perform is transferred elsewhere. It can be an arduous process for all those involved. As part of the current framework, businesses must inform and, where appropriate, consult with “appropriate representatives” of the affected employees; a process which is understandably very difficult where there are no appropriate representatives.
Usually, this requires the election of representatives specifically for the purposes of consultation in relation to the transfer. However, in a bid to “save businesses red tape and improve engagement with workers”, the Government has announced its intention to abolish this requirement for businesses with fewer than fifty employees and for transfers which affect fewer than ten. Employers will instead be free to consult with affected members of the workforce directly. While this is by no means a bad idea in principle, it likely won’t have much of an impact in practice. Many employers and employees prefer consultation to take place with the affected individuals in any event. Finally, this small tweak to TUPE seems to confirm that the regulations will be with us for some time to come and will not disappear in to the sunset, as some had hoped.
Non-compete Clauses
Last, but certainly not least, the Government has announced its intention to legislate to limit the length of non-compete clauses to just three months. This is an unprecedented change which, according to the Government, is set to “provide a boost to the wider UK economy” and “increase productivity by widening the talent pool, and improving the quality of candidates” – at least, in theory.
Employment law, as it currently exists, does not impose an upper limit on non-compete clauses. They are a type of restrictive covenant; a clause within a contract of employment which is intended to prevent the employee from competing with their former employer once that contract has come to an end. To be enforceable, they must be: –
- Intended to protect the legitimate, proprietary interests of the company; and
- No more restrictive than necessary having regard to the interests of both parties and the public.
This is already a high bar and courts do not tend to view long non-compete clauses of over six months as being enforceable, other than in relation to the most senior of employees. However, employers frequently rely on these types of clauses as a deterrent and will understandably be concerned about how best to protect their ideas and strategies going forward. The policy states that limiting non-compete clauses “will not interfere with the ability of employers to use (paid) notice periods or gardening leave or to use non-solicitation clauses”. It is possible that we may see more employers relying on extended notice periods and/or garden leave; a solution which feels somewhat at odds with the Government’s intention to “boost innovation” and cut costs. There is also a question about how this change will impact the UK’s attractiveness to multi-national employers, where companies may see their UK-based employees leave for a competitor after only three months of restrictions. While existing confidentiality and non-solicitation rules do not appear to be in the Government’s sights for the time being, the erosion of legitimate protections are a worry for employers and thought will need to be given to how best to protect legitimate interests in the future.
The Employment team at Balfour+Manson are on hand to assist you in approaching these changes and all other HR and Employment Law issues – please get in touch to discuss your requirements.
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Simon Mayberry
Employment law update
In its policy paper titled Smarter Regulation to Grow the Economy, the Government has outlined a part of its vision for employment law post-Brexit. In the words of Kemi Badenoch, the plan is to “tackle the red tape that holds back UK firms” and give businesses “the freedom to do what they do best – sell innovative products, create jobs and grow the economy”.
This comes on the back of a mostly welcome (and widely predicted) rollback of the sunset clause contained within the Retained EU law (Revocation and Reform) Bill as originally envisaged; a clause that would have seen retained EU legislation be revoked en masse if not otherwise explicitly retained or replaced by the end of 2023. This seems like a sensible approach. We are only six months or so from the projected D-Day with growing uncertainty amongst lawyers, employers, and workers – at least, until now. Indeed, only three rarely-used sets of regulations will now be repealed. So, what will be changed as part of the Government’s bold vision?
Working Time Regulations
First among the proposed changes is a series of amendments to the Working Time Regulations (“WTR”), which implement the Working Time Directive (93/104/EC) (“EWTD”).
The Government intends to axe “time-consuming and disproportionate” record-keeping obligations for businesses in so far as these relate to working hours. Regulation 9 of the WTR compels employers to keep a record of the daily working hours of their staff. This is intended to ensure compliance with the limit on a working week (48 hours a week on average over a reference period). However, this is also a massive administrative undertaking and not one which many employers do in practice. The new policy paper predicts that scrapping these obligations will save UK businesses an ambitious £1bn per year, though it is notably silent as to how compliance will be measured going forward.
The Government has also announced its intention to “reduce the administrative burden and complexity of calculating holiday pay” – and rightly so. If you’re an employer, or if you work in HR or employment law, the words ‘holiday pay’ are probably enough to make you break out in a cold sweat – or at the very least roll your eyes. The need for reform has become abundantly clear in the aftermath of Harpur Trust v Brazel. Indeed, the Government is already consulting on how best to reform holiday pay insofar as it applies to casual workers. They have now announced plans to re-introduce “rolled-up holiday pay”, a practice which was extremely useful in industries with high numbers of atypical employees, such as care and manufacturing, and which was made unlawful following a decision of the ECJ. In addition, the Government intends to merge the two separate annual leave entitlements in to one pot of statutory minimum annual leave, without altering the amount of leave.
TUPE
Briefly, the Transfer of Undertakings (Protection of Employment) (“TUPE”) Regulations protect the rights of employees when the work they perform is transferred elsewhere. It can be an arduous process for all those involved. As part of the current framework, businesses must inform and, where appropriate, consult with “appropriate representatives” of the affected employees; a process which is understandably very difficult where there are no appropriate representatives.
Usually, this requires the election of representatives specifically for the purposes of consultation in relation to the transfer. However, in a bid to “save businesses red tape and improve engagement with workers”, the Government has announced its intention to abolish this requirement for businesses with fewer than fifty employees and for transfers which affect fewer than ten. Employers will instead be free to consult with affected members of the workforce directly. While this is by no means a bad idea in principle, it likely won’t have much of an impact in practice. Many employers and employees prefer consultation to take place with the affected individuals in any event. Finally, this small tweak to TUPE seems to confirm that the regulations will be with us for some time to come and will not disappear in to the sunset, as some had hoped.
Non-compete Clauses
Last, but certainly not least, the Government has announced its intention to legislate to limit the length of non-compete clauses to just three months. This is an unprecedented change which, according to the Government, is set to “provide a boost to the wider UK economy” and “increase productivity by widening the talent pool, and improving the quality of candidates” – at least, in theory.
Employment law, as it currently exists, does not impose an upper limit on non-compete clauses. They are a type of restrictive covenant; a clause within a contract of employment which is intended to prevent the employee from competing with their former employer once that contract has come to an end. To be enforceable, they must be: –
This is already a high bar and courts do not tend to view long non-compete clauses of over six months as being enforceable, other than in relation to the most senior of employees. However, employers frequently rely on these types of clauses as a deterrent and will understandably be concerned about how best to protect their ideas and strategies going forward. The policy states that limiting non-compete clauses “will not interfere with the ability of employers to use (paid) notice periods or gardening leave or to use non-solicitation clauses”. It is possible that we may see more employers relying on extended notice periods and/or garden leave; a solution which feels somewhat at odds with the Government’s intention to “boost innovation” and cut costs. There is also a question about how this change will impact the UK’s attractiveness to multi-national employers, where companies may see their UK-based employees leave for a competitor after only three months of restrictions. While existing confidentiality and non-solicitation rules do not appear to be in the Government’s sights for the time being, the erosion of legitimate protections are a worry for employers and thought will need to be given to how best to protect legitimate interests in the future.
The Employment team at Balfour+Manson are on hand to assist you in approaching these changes and all other HR and Employment Law issues – please get in touch to discuss your requirements.