In more detail

Working time records

The government intends to consult on working time reporting and other administrative obligations under the Working Time Regulations (WTR) 1998. It believes that the current rules place disproportionate burdens on businesses. 

These proposals would include removing retained EU case law (Federación de Servicios de Comisiones Obreras v Deutsche Bank SAE, ECJ) which requires employers to record daily working hours, including overtime, worked by employees.  This case was decided under the EU Charter of Fundamental Rights and the Working Time Directive. Currently, the UK's Working Time Regulations require only that employers keep and maintain "adequate" records to demonstrate that they are complying with rules on maximum working hours (for employees who have not opted-out) and protections for night workers.   

Many employers were unsure how to comply in practice with the Deutsche Bank ruling, and have been awaiting further guidance.

Simplifying calculation of statutory holiday pay

The government proposes to simplify statutory holiday pay calculation, subject to consultation. It identifies two particular measures. The first is to allow rolled-up holiday pay. Paying holiday pay in this way is a fairly common feature for zero-hours workers who, due to the nature of their working patterns, sometimes don't designate days specifically as annual leave. Rolled-up holiday pay was held to be unlawful several years ago, but any amounts clearly identified and paid as such could be offset against any potential liabilities. In practical terms, this has meant that many organisations have continued to use rolled-up holiday pay, due to its administrative convenience, and the lack of a practical alternative. 

The second identified measure is to merge the two types of statutory holiday entitlement. A worker's overall statutory entitlement is to 5.6 weeks of leave (28 days for a full-time worker). Four weeks of that entitlement derives from the EU Working Time Directive. The additional 1.6 weeks was granted as a purely UK entitlement. Different rules have built up over time relating to how to calculate statutory holiday pay for the two types of leave, as well as in relation to the right (or lack thereof) to carry leave over to the next holiday year. The policy paper is silent on which set of rules would be retained. In relation to holiday pay, there has been lots of EU case law on what elements of pay need to be factored into the holiday pay calculation for the EU-derived part of the leave, for example compulsory and guaranteed overtime as well as some forms of commission. It is unclear whether the government would propose to extend and retain those principles to all statutory holiday, or revoke them.

It remains to be seen whether the government will identify any other measures for simplifying holiday pay. These proposals come at a time that another consultation has recently closed, which dealt with the implications of the Supreme Court's decision in Harpur Trust v Brazel for part-year workers: New government consultation on holiday pay published.

Relaxing TUPE consultation requirements for small businesses

The government will consult on allowing small businesses (employing fewer than 50 people with the TUPE transfer affecting less than 10 employees) to consult directly with affected employees. Currently, unless the employer falls within the scope of a micro-business (employing fewer than ten employees), they must consult with employee representatives on the TUPE transfer.

Limiting post termination non-compete restrictions to three months 

The government is planning to legislate, when parliamentary time allows, to limit the length of post termination non-compete clauses in the employment context to three months. The government does not believe that this will affect an employer’s ability to use paid notice periods, gardening leave or other post-termination restrictions such as non-solicitation clauses. Back in 2020, the government ran a consultation on measures to reform post-termination restrictions in contracts of employment. The consultation closed on 26 February 2021 but the government has not published its response. It is unclear whether the current proposal is intended to supersede the earlier consultation. 

Retained EU Law (Revocation and Reform) Bill (REUL Bill)

The government's much championed REUL Bill would have seen all EU-derived subordinate legislation effectively abolished by the end of this year by default, unless it was specifically retained. The number of affected pieces of legislation was estimated to be in the region of 4,000. The Bill allowed the government to extend, exempt or keep (possibly with modifications) affected legislation, but the default position was that it would disappear from the UK statute book.

The government has now acknowledged the widespread criticism of this sunset mechanism and will replace it with a mechanism whereby only expressly listed legislation will be revoked. This is likely to be in the region of 600 pieces of legislation.

It remains to be seen whether any items of employment legislation will make it onto the list of rules to be revoked. However, the government's announcements on TUPE consultation and working time rules (see above) suggest that TUPE and the WTR 1998 will be retained, subject to the possible changes the government is proposing. 

Notwithstanding the scrapping of the sunset mechanism, the REUL Bill could still be significant for employment law in other ways. The Bill will do away with any remnants of the old principle of the supremacy of EU law as well as "general principles of EU law". What this means at a high level is that the foundations of lots of case law could be called into question. In addition, the Bill effectively seeks to encourage UK courts and tribunals to stop and really think whether they should continue to follow any ECJ case law, or domestic case law that applied ECJ case law. One area of employment law that has seen frequent ECJ interventions is the entitlement to paid annual leave. It is possible that some of this case law could be open to challenge under this Bill, to the extent that it isn't expressly retained or modified as a result of the government's new consultation.