Fall-out from Brexit – changes afoot to employment law?
When we left the European Union there was speculation that the government would rethink some of the legislation which we had been forced to adopt as a result of being members. While much of the legislation filtering out of Europe has had a positive effect, some has been viewed a little more askance in placing inordinate pressures on employers through very employee focused entitlements, often to the detriment of employers. The corollary of this was a concern that, if the government did decide to rescind European Union inspired legislation, the pendulum would swing the opposite way.
It looks as if this is now coming to pass; there are movements afoot to reconsider some elements of legislation which have emanated from Europe. The government has announced a number of important changes that it proposes to make to various areas of employment law including working time, TUPE, and restrictive covenants. All these are areas of keen interest to employers, whether it is in respect of managing the stringent obligations under the Working Time Regulations, protecting their legitimate business interests by use of restrictive covenants, or buying and selling businesses and changing contracts with supliers, where the onerous requirements of TUPE apply.
What exactly are the changes to employment law announced by the Government?
What is in the offing? The announcement that has been made about the legislation being reconsidered offers hope to employers that some of the administrative headaches currently experienced may be about to be alleviated. No timeframe has been provided for when these changes might take place, but the government is looking at the following:-
- Removing reporting requirements under the Working Time Regulations. Currently this is an administrative requirement which entails the employer creating and maintaining a huge number of records in respect of hours worked by employees, often for no other purpose than satisfying a regulatory audit in the unlikely circumstances of this taking place.
- Introducing “rolled up holiday pay”. While technically rolled up holiday pay remains unlawful, this is often being honoured more in the breach. With atypical workers is it well-nigh impossible to pay them for actual time taken because they so often work irregular hours, often for short periods of time, and in circumstances where the whole point of their engagement is to come in, do the work, and then leave. To accrue and take holiday during that period of time because the law says rolled up holiday pay cannot be made, is simply unworkable. Therefore, if the government is to introduce something that would allow rolled up holiday pay so that employers are not acting unlawfully if they adopt it, would be a very welcome positive move for the huge number of employers who deal with atypical workers.
- Merging the basic and additional holiday entitlements under the Working Time Regulations into one. It is an artificial distinction based only on the fact that the Working Time Directive requires a minimum of 4 weeks annual holiday whereas our Working Time Regulations also provide for public holidays – meaning that the minimum holiday entitlement in the U.K. is 5.6 weeks. Merging the two into one would at least mean that there was no distinction between our statutory holiday and holiday under the Working Time Directive should the situation arise when employers have to resort to legal advice on the case law covering both aspects.
- Removing the requirement to elect employee representatives for the purpose of TUPE consultation for businesses with fewer than 50 employees and transfers affecting less than 10 employees, allowing businesses to consult directly with the affected employees. It is uncertain how much effect this will have because employers with less than 10 affected employees now are allowed to consult without involving employee representatives. However it indicates the government’s willingness to look at the TUPE provisions generally -which may or may not be a positive move.
- Limiting non-compete clauses to a maximum of 3 months. This could be a bone of contention for employers who need to protect their interests when senior employees with a lot of influence in the business seek to move their talents elsewhere to a competitor. The reality is, however, that in many circumstances robust confidential information clauses, coupled with effective non-solicitation and non-dealing clauses, can offer commensurate protection. Employees are always able to take away with them what they carry in their heads – nothing will be able to stop that. As such, if they go to work for a competitor but cannot solicit or deal with clients, and are precluded from touching their past employer’s confidential information, the fact that they are working for a competitor in many respects is not going to be of much practical use to that competitor until such time as the restrictive covenants expire.
Quite a lot for the government to take on board, and it won’t happen overnight. But it certainly looks as if there are some interesting developments coming down the line.
If anything in this note has struck a chord or you require further information, please do not hesitate to contact Gemma Ospedale in the London employment team at RWK Goodman. We have a strong team of employment lawyers both in London and across all our offices who are happy to help with any enquiries or issues which employers may experience.