Brexit Freedoms Bill - Guest Article by John Morgan

Government changes the approach to ‘Brexit Freedoms Bill’ – employment law reforms still possible

There has been much chatter in the last few weeks that the colloquially named ‘Brexit Freedoms Bill’ may be altered as it is finalised in parliament, with ongoing reports of discussions within the Conservative Party about its final form. That came to pass last week with announcements that the government would alter its approach to the Bill, at the same time announcing its intentions regarding a number of important areas of EU-derived employment law. But what does this mean for employers?

Those who followed the long-running discussion around the form of Brexit will recall that, ultimately, EU laws were substantially retained with materially the same effect as before. Nothing substantial changed for employees or HR.

Enter, stage left, the new Bill. While it had previously set down a default position that all EU-derived laws would have been removed in their entirety when the clock struck midnight on 31 December 2023 unless the government took steps to retain specific laws, it will now target a narrower finite list of around 600 specific pieces of EU and secondary legislation. This gives businesses much greater certainty around which specific laws are being removed and confirms that (at least for now) certain retained EU employment laws, including regulations supporting family leave (e.g. Maternity and Parental Leave etc Regulations 1999); part-time and fixed term working and most aspects of the Working Time Regulations and TUPE Regulations, will each continue to be the law of the land.

However, it has indicated that it will push ahead with some other aspects of the Bill, including:

• abolishing the principle of supremacy of EU law, making it easier for higher courts to depart from existing EU law and case law;
• broadening existing rules of interpretation, for example, when applying EU-derived employment rights or case law. This has the potential to add uncertainty for employees and employers when interpreting and applying large parts of employment law; and
• retaining powers in the Bill that allow the government to continue to amend EU laws. This suggests that it is minded to continue assessing EU retained law with a view to further reform or revocation, which may have implications for employment law.

While the government may contemplate using the powers it intends to grant itself to make further adjustments, a spanner may be thrown in the works by the UK-EU trade deal which contains a commitment from each side to ensure a ‘level playing field’ in their labour markets. This may act as a natural ‘brake’ on any wider reform attempts. Employers and HR teams in particular will want to continue to monitor the situation, given it may evolve further.

In tandem with the progress on the Bill, the government has announced its intentions to:

• in relation to TUPE, allow businesses with fewer than 50 people and transfers affecting less than 10 employees to consult directly with the affected employees, which many businesses will likely welcome as a sensible amendment to existing strict requirements to consult with representatives before a TUPE transfer;
• in relation to holiday pay, government will consult with a view to (i) removing EU case law requiring working hour records to be kept under the Working Time Directive, (ii) permitting rolled-up holiday pay (this is where holiday pay is automatically built into workers’ salary in every payslip). Currently, rolled-up holiday pay is not permitted under EU case law; and (iii) merging the current two separate ‘EU’ and ‘UK’ holiday entitlements into one pot of statutory annual leave, while maintaining the same amount of statutory leave entitlement overall; and proposes to limit the length of non-compete clauses to three months for employees and certain workers. The intention is not to extend this provision to wider workplace contracts, such as partnerships, LLP or shareholder agreements. Even so, the impact on existing non-compete clauses remains unclear. This represents a very material reform and prudent employers will want to monitor the progress of this proposal.

John Morgan is a Principal Associate in Eversheds Sutherland (International) LLP’s market-leading Labour, Employment & Immigration team. This article first appeared in People Management.

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