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UK Government reveals employment law reform plans

The UK Government has released the Smarter Regulation policy paper outlining key changes to employment law in the post-Brexit era.

These include limiting non-compete clauses to three months, allowing rolled-up holiday pay, and altering the requirement for Transfer of Undertakings – Protection of Employment (TUPE) transfers.

So, what changes have been made and how could you be impacted as an employer?

Three-month cap on non-compete clauses

The Government intends to legislate a three-month cap on non-compete clauses in employment contracts.

Designed to promote employee mobility and economic growth, the measure raises questions about its implications for other contracts and the impact on existing non-competes longer than three months.

Permitting rolled up holiday pay

The Government will allow for rolled up holiday pay, a change from the previous prohibition by EU case law.

This move is part of wider reforms on holiday entitlements for workers with irregular hours.

Consolidation of holiday entitlements and changes to work time recording

The Government plans to merge the EU-based four weeks’ leave and the UK’s additional 1.6 weeks’ leave into a single statutory annual leave.

It also plans to remove the requirement for most employers to record working hours, a move that could save businesses £1 billion annually.

Minor reforms to TUPE

For small businesses with fewer than 50 employees and transfers affecting less than 10 employees, the Government will allow direct consultation with affected employees, removing the need to elect representatives.

Retention of EU laws

The controversial sunset clause in the Retained EU Law Bill, which could have deleted thousands of EU-derived laws by the end of 2023, has been withdrawn.

Instead, the Government will maintain a list of regulations to be revoked. However, it retains the power to amend EU-derived laws, indicating potential future changes.

If you need advice on these changes to employment law, our expert team are here to support you – get in touch today.