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Important employment law reform: A round-up of the changes announced

11 May 2023
The sunset clause in the Retained EU Law (Revocation and Reform) Bill ("the Bill") which would have repealed the majority of retained EU law by the end of the year will be replaced.  The government has announced a number of further reforms to UK employment law in the policy paper "Smarter regulation to grow the economy".  In this update we consider the key changes which will impact employers. 

Sunset for the sunset clause: EU employment law reform held back 

In a written statement to parliament it has been announced that the sunset clause in the Bill will be abandoned.  As the Bill is currently drafted with the sunset clause, almost all retained EU law would automatically be revoked at the end of 2023, unless it was expressly saved by a statutory instrument.  In light of the legal uncertainty that this approach has created, parliament is tabling an amendment which effectively reverses the effect of the Bill, so that all EU legislation will be automatically retained unless specifically revoked.  The amendment replaces the sunset clause in the Bill with a list of the retained EU laws that the UK intend to revoke under the Bill at the end of 2023.  All EU laws not listed will remain as they are. 

The amendment will provide certainty for UK businesses by making it clear which regulations will be removed from the statute book, rather than highlighting only the EU laws which would be saved.  

The written statement goes on to assert that the Bill still allows the UK to continue to amend EU laws, so more complex regulation can still be revoked or reformed after proper assessment and consultation.  

Smarter regulation to grow the economy: employment law reform


Reviewing and reforming employment law to some extent was inevitable following Brexit.  Wasting no time in making amendments the government has published the policy paper Smarter Regulation to grow the economy announcing proposed changes to employment law that will, according to the paper, cut red tape for businesses and save £1 billion per year while safeguarding the rights of workers.  

Here is a summary of the key proposals:

Reducing red tape around working time 

In an aim to reduce the administrative burden created by the Working Time Regulations 1998 ("the WTRs") the policy paper states that it will be consulting on proposals to improve how the WTRs work without affecting the rights that really matter to workers.  The proposals include:

  • Removing retained EU case law that requires businesses to keep working time records for almost all members of the workforce.  
  • Reducing the administrative burden and complexity of calculating holiday pay by introducing rolled-up holiday pay, so that workers can receive a proportion of their holiday pay with every pay slip.
  • Merging the two separate leave entitlements into one entitlement to annual leave (merging regulations 13 and 13A of the WTRs leave into one entitlement).  


No timetable has been given. 

Tweaking the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE")

Again with the aim of reducing the administrative burden on businesses 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 fewer than 10 employees, allowing businesses to consult directly with the affected employees.  


No timetable has been given.  

Restricting the restrictions:  the future of non-compete clauses

In the policy paper the government has announced an intention to legislate to limit the length of non-compete clauses to three months, providing employees with more flexibility to join a competitor or start up a rival business after they have left a position.  

According to the policy paper this will give up to five million UK workers greater freedom to switch jobs, apply their skills elsewhere and even earn a pay rise.  The government is attempting to tackle two key issues: 

  • The impact the cost of living crisis is having on real income.  Employees quite simply need more money to live and are willing to follow the money by moving employment. This amendment would facilitate movement.  
  • The competitive labour market.  Top talent is as always in high demand.  By reducing non-compete clauses to three months the labour market will be opened up and it will become much easier for employers to recruit highly skilled employees.    

Employers wishing to protect their businesses from departing employees may want to consider extending notice periods and using garden leave, both of which the government have said will not be affected by the new legislation. 


Parliament will legislate "when parliamentary time allows".  


The sunset clause was a real concern due to the legal uncertainty it would have created.  The administrative burden of reviewing and "saving" key employment laws by the end of 2023 would have been incredibly difficult if not impossible to complete in that timeframe.  Reversing the position makes sense.  The legal uncertainty risked significant litigation and the resultant consequences – from increased legal costs to wasted management time to more employee grievances – to name but a few. 

The announcements on employment law reform demonstrate the government's willingness to keep chipping away at EU law.  Although the reforms do not appear radical on the surface, there is a question as to whether the amendments to the WTRs will indirectly affect what needs to be included in calculation of pay for the new single holiday entitlement.  However, regardless of this, they do show that the government will not shy away from change.  One thing for certain is that employment law reform is back on the agenda.  We will keep you updated.  


If you need any assistance with regard to the issues raised in this update please do not hesitate to get in touch.  

Further Reading