New law: Government proposes employment law changes to remove EU-derived law

Proposals in the consultation on retained EU employment law reforms include the following:

• Merger of the four-weeks’ holiday entitlement derived from EU law with the 1.6 weeks’ holiday entitlement under domestic law. This is to create a single leave entitlement with one set of rules. The consultation also asks for views on how holiday pay should be defined and calculated, including in a worker’s first year, and could theoretically result in commission or overtime being excluded.
• Introducing ‘rolled-up’ holiday pay - where an employee does not get holiday pay during a holiday because it is already included in their hourly pay rate – because, for example, they are an agency worker or on a zero-hours contract. This is currently unlawful, but the proposal is to include this as an additional option when calculating workers’ holiday pay.
• Abolishing the legal requirement for employers to record all individuals’ working hours, including overtime.

The consultation also proposes changes to the protections for employees that apply on, for example, transfer of a business to a new owner or of a service to a new provider, under what lawyers call the TUPE rules. Currently, an employer must consult collectively with elected representatives in advance of such a transfer – they cannot consult directly with employees unless the business has fewer than ten of them. This can significantly increase the administration required and lengthen the process. The proposal includes extending this exemption to businesses with fewer than 50 employees and to larger employers where the transfer affects fewer than ten employees, if there are no existing elected representatives in place.

The government has said it will not alter the rules setting a maximum average working week of 48 hours unless an employee opts out, 20-minute rest breaks every six hours, and young worker protections.

Separately, the government has announced plans to limit the maximum period for which non-compete clauses can apply to an ex-employee or ex-worker to three months.

No proposed timetable for the changes has yet been issued.

Operative date

• To be announced

Recommendation

• Employers should check out the consultation on the GOV.UK website to assess the implications, and monitor for future developments.
• Employers should also review employees’ and workers’ terms of employment to see whether changes are needed to any non-compete clauses, and consider alternative protections such as longer notice periods and garden leave.