New employment law changes announced by the Government

May 17, 2023

On 10 May, in its policy paper Smarter Regulation to Grow the Economy, the Government has made some announcements that impact employment law. The changes are intended to create a more competitive and productive economy by reducing unnecessary and burdensome existing regulation which impedes competition or acts as a block on innovation.

Significantly, the sunset clause in the Retained EU Law (Revocation and Reform) Bill will be replaced with something that reverses the Government’s initial proposal. The sunset clause, which provided that EU law would be automatically revoked on 31 December 2023 unless expressly retained, will be revoked and, by stark contrast, in its place, the retained EU law will now continue in force unless the Government specifically legislates to repeal or amend it.

The following three new measures have been announced:

•Reducing Working Time Regulations reporting burdens: The Government considers that these regulations, derived from EU legislation, whilst providing valuable protection to workers, place disproportionate burdens on businesses, specifically recording working hours and increased administration. The new proposals include removing retained case law in this area as well as reducing the administrative burden and complexity of calculating holiday pay by introducing rolled up holiday pay and merging the two separate leave entitlements currently in place.

Simplifying regulations on TUPE transfers: The Government considers that the rules on TUPE can be simplified without changing employee rights. Under current rules, there is an obligation to consult with elected representatives on all TUPE transfers, unless the employer has fewer than 10 employees. The Government will consult on removing these requirements for employers with fewer than 50 employees and transfers of fewer than 10 employees.

•Reforming non-compete clauses: The Government intends to legislate to limit the length of non-compete clauses to three months to provide employees with more flexibility to join a competitor or start up a rival business after they have left a position, without interfering with the use of paid notice periods, gardening leave, non-solicitation clauses or confidentiality clauses.

For further information, please contact JD Ghosh or Stuart James or Paul Norris.

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