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Retained EU Law

3 November 2022

Will the Retained EU Law Bill create big changes in UK employment law?

 

The Retained EU Law (Reform and Revocation) Bill, also known as the Brexit Freedoms Bill, is intended to enable the Government to amend, repeal and replace elements of retained EU law more easily and quickly. When the Bill is passed into law, the principle of EU law supremacy will be removed and secondary laws, those deriving from the EU and retained within UK domestic law after Brexit, will be revoked across the UK at the end of 2023.

Although the Bill will not change primary British laws such as the Employment Rights Act, a significant portion of UK employment law derives from EU law. The laws covering TUPE, for example, involving the protection of employment in business transfers and takeovers and the Working Time Regulations, covering holiday rights and the working week, both originated in EU law. Employers face uncertainty until it is clear which existing laws will be retained and which will be amended and replaced. Businesses are keen to understand the implications of the Bill and respond to any changes as soon as possible to maintain healthy workplaces, avoid business disruption and ensure continued compliance.

 

Laws likely to be retained

 

Although in theory the Bill could facilitate the biggest set of employment law reforms since the 1970s, with over 2400 pieces of EU legislation retained in UK law at the end of the Brexit transition period, in practise the change in employment law will probably be much less dramatic. All primary laws, such as the Employment Rights Act, which is enshrined in UK law, will not be affected. There is the indication that the Government looks to the Bill to support a deregulation programme to minimise red tape and paperwork for businesses and encourage growth in the economy, however this will need to be balanced with the needs of voters. Large or unpopular changes affecting the rights of employees are unlikely. Government needs the support of the workforce who make up a large proportion of voters. They are unlikely to remove or reduce rights relating to breaks or parental rights, or to try to change significant principles. We can expect that changes to employment law will probably be confined to peripheral areas such as record-keeping obligations.

 

Laws that may be restated, replaced or updated in the months and years to come and what this will mean for individuals and employers

 

Most laws will probably be restated or updated rather than replaced. A minority may be revoked.

The key pieces of law that may be affected are those involving protections for workers. Obligations around working time regulations, elements such as rest breaks and parental leave, and parts of TUPE may be affected in areas.

Although put forward as a suggestion, it looks unlikely that more extreme changes such as revoking the 48-hour working week or no fault for dismissals for people earning more than £100,000 will happen. Change is more likely to involve reducing record-keeping around the working time rather than the principles themselves.

For employers, a key element of this Bill causing uncertainty is the ability for the Government to restate, replace or update laws. These changes to regulations can be moved through Parliament a lot faster than when introducing a new Act. Government will be able to introduce revised regulations quickly and easily, and employers will need to be ready to handle the changes. Although there may be some panic until the extent of the changes are clear, the likelihood is the changes to employment law will not be significant.

 

Deregulation and record keeping changes

 

The Government is looking at deregulatory moves such as removing requirements for businesses to keep records of employee working hours, believing this will save businesses up to a billion pounds per year.

The recent decision to change employee number thresholds for gender pay gap reporting is an example of how the Government is already deregulating. Businesses with less than 250 employees are currently exempt from elements of regulatory requirements, including gender pay gap and executive pay ratio reporting, and those with less than 50 employees are often completely exempt. The Government has recently expanded this threshold to 500 employees and may extend this threshold to 1000 employees in the future.

 

Intended and possible unintended consequences of the Bill

 

The intended consequences of the Bill are to facilitate easy development of regulations that specifically meet the needs of the UK, and to remove or revoke any EU laws which may be outdated and causing unnecessary reporting pressure. The Government is looking at deregulation as a means to boost economic growth and support businesses by creating less of an administration headache.

Although the intention is to ensure that employers are supported and employee rights are maintained, it appears that changes will be mostly limited to reporting requirements rather than key elements of employment law and working practises, there are risks of unintended consequences.

There is a risk that changes and uncertainty caused will drive negative workplace behaviours. The biggest unintended consequences of the Bill will potentially be caused by fear and uncertainty.

Requiring the recording and reporting of time keeps a focus on this key area of employee welfare. By removing the need to record and report, there is a danger that a focus is taken away from this area and that the spotlight is not shining so brightly on social sustainability and employee wellbeing.

There are concerns that no longer being required to report on gender pay gap will immediately have a negative effect for women at work. By not reporting, employers may be less concerned and less focused on the issues. Reporting can cause administrative burdens, however being required to report at board level brings key issues to the forefront.

Many organisations will continue with elements of reporting that are no longer a legal requirement as part of their environmental, social and governance reporting. Businesses that are B Corp certified, looking to meet specific industry standards, deliver against the UN sustainable development goals and mindful of their stakeholder expectations in these areas will want to continue to demonstrate evidence of employer responsibility and care for employee wellbeing.

Although the intention may be to uphold the principles of UK employment law and facilitate an easier reporting process for employers, the element of uncertainty around any change, fear of the unknown, concerns about the implications of reduced reporting requirements and the risk of unintended consequences pose challenges for businesses and a threat to the rights of employees in the coming years.

Employers will look to ensure that workforces are happy, healthy, productive and well protected. They will want to be informed about any changes, confident that they are complying with new or amended legislation and reassured that any changes cause minimum disruption and maximum benefit to employees and workplaces.

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