Employment Law Update – May 2023

22nd May 2023

Earlier this month the Government made a series of announcements regarding changes to legislation. We have summarised the key proposed changes to employment law below.

Government abandons sunset clause

The government published a written statement which announced to parliament that they are abandoning the sunset clause in the Retained EU Law (Revocation and Reform) Bill.

As the Bill is currently drafted, almost all EU law will be automatically revoked, unless a statutory instrument is passed to preserve it. However, this position is being reversed; EU law will remain binding unless it is expressly repealed. The Bill will be amended to contain a list of the retained EU laws that the government intends to revoke on 31 December 2023.

Proposals to limit non-compete clauses

The government announced that they intend to introduce new legislation to restrict the duration of non-compete restrictive covenants to three months. Such clauses can play an important role in protecting employers’ businesses and allowing competition with other businesses but have become burdensome on employees trying to find new employment; such clauses have become a default part of contracts of employment.

The new legislation will not affect non-solicitation clauses; these will remain as ‘no more than is reasonably necessary to protect the employer’s legitimate business interests.’ Additionally, the new three-month period will apply only to post-termination covenants and will not apply to any confidentiality clauses. There is currently no timeframe as to when this will occur. Employers will still be able to restrict the employees during any garden leave or notice periods.

It is estimated that amendments to non-compete restrictive covenants will affect up to 5 million UK workers. A time frame has not been provided as to when the new legislation will come into force.

Brexit changes to employment law – Working Time Regulations

The government launched a consultation on the Working Time Regulations; the new employment law measures are set out in the policy paper ‘Smarter Regulation to Grow the Economy.’ Basic holiday and additional holiday  are set to be merged into one entitlement as ‘annual leave.’ This may result in the calculation of holiday pay not including commission, overtime etc., however this has not been confirmed by the government.

The government intend to remove the requirement for record-keeping under the Working Time Regulations for working hours.  Rolled-up holiday pay will be allowed going forward. This has been unlawful for some years under EU law. An employer would normally avoid this breach by showing any rolled-up entitlement clearly on an employees’ pay slip.

As part of the consultation, the government will be looking at reform of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

If you need advice on legislation changes, please get in touch with the employment team at employment@schofieldsweeney.co.uk.

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