Proposed changes to employment law after leaving the EU
On 10th May, the government announced several proposed changes to employment law following the UK leaving the European Union (EU). The legislation to implement the changes will be ‘when parliamentary time allows’ and the intention behind the changes is to grow the economy and cut costs for businesses.
Continue reading for the measures we believe are most crucial for your business to be aware of.
Non-compete clauses are restrictions often found in employment contracts limiting an employee’s ability to work for or establish a competing business after their employment is terminated. The government has set out its view that such clauses deter employees from looking for better paying jobs, whilst also limiting the ability of businesses to compete and innovate.
In a bid to prevent non-compete clauses becoming burdensome on both employers and employees, the government intends to implement a three-month limit on the duration of any such restriction.
It has been confirmed employers will still be able to impose longer time-limits on other post-termination restrictions, such as non-solicitation and confidentiality clauses, however, the announcement is silent about non-dealing clauses.
The Working Time Regulations require employers to keep records of the working hours of most of their employees, including those who have opted out of the 48-hour working week limit. The government has proposed to remove the impact of retained EU case law that imposes this requirement.
Should the requirement be removed, it may still be practical for your business to keep these records as they can assist in the event of a dispute arising over whether an employee has been paid correctly for the time they have worked.
The government has also proposed to reduce the ‘administrative burden and complexity of calculating holiday pay’. To achieve this, they have put forward two proposals: 'rolled up' holiday pay and merging 'normal' and 'additional' holiday leave.
Paying workers an additional sum each month to represent holiday pay (typically 12.07% of the salary) is technically unlawful under EU law, despite still being adopted by some UK employers. In light of this the Government proposes to legalise this method of calculating holiday pay.
The question remains as to whether the government, under this proposal, would also remove the right to include regular payments that employees receive over and above their salary (such as overtime and commission) in calculating holiday pay.
The second proposal put forward involves merging the right to ‘normal’ holiday leave and pay under EU law (20 days for a full-time employee), with the right to ‘additional’ holiday leave and pay under domestic law (8 days for a full-time employee).
This would create one entitlement and may result in holiday pay being calculated under the old method of excluding commission and overtime; however this is yet to be seen.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protects employees when the business they work for transfers to a new owner or the service for which they work transfers to a new provider.
Employers involved in such a transfer may be required to consult with elected staff representatives. An exception to this is available to businesses with fewer than 10 employees who are allowed to consult directly with the affected employees themselves.
The government will consult on removing the requirement to elect employee representatives for the purpose of TUPE consultation when there are fewer than 50 employees in the business and fewer than 10 transferees. Removal of this requirement will increase the circumstances in which businesses are allowed to consult directly with the affected employees.
Further details of these proposed measures can be found in the policy paper ‘Smarter Regulation to Grow the Economy’ published by the Department for Business and Trade.
Should you have any queries on how these changes may affect your business please contact our team of employment law specialists.
Contact Kelsey to discuss this further.
