UK: Retained EU Law (Revocation and Reform) Bill and Consultation on reforms to Working Time, Holiday Pay and TUPE

published on 9 June 2023 | reading time approx. 3 minutes

Following Brexit, the UK government introduced the Retained EU Law (Revocation and Reform) Bill (“REUL”) on 22 September 2022 which was set to make it easier to amend, repeal or replace EU law retained in the UK. The Bill included a “sunset clause” and its role was to ensure that any retained EU law following Brexit, which was not preserved or replaced in the UK before the end of 2023 would be automatically repealed at the end of the year.

However, the UK government has now stated that the sunset clause will be revoked from the REUL. Instead, retained EU laws will remain and there will be a list of EU laws that the government intends to revoke at the end of this year. We deal below with the effects that this change will have on UK employment law.

The effects on UK employment law

The following legislation is being repealed (although it is not used very widely):

The Community Drivers’ Hours and Working Time (Road Tankers) (Temporary Exception) (Amendment) Regulations 2006 which covers the working time and rest breaks of work bus, coach and lorry drivers;
The Posted Workers (Enforcement of Employment Rights) Regulations 2016 which covers UK employers posting workers to a member state of the European Economic Area (EEA); and
The Posted Workers (Agency Workers) Regulations 2020 which covers agency workers who have been posted to work in the EEA. Following Brexit, the concept of a "posted worker" no longer applies.

The UK government has also taken the opportunity to "improve regulation following our departure from the EU" by reviewing and reforming domestic regulations which are not connected with retained EU law but which are thought to be burdensome and has opened a consultation into amending the following:

Working Time

Under the UK Working Time Regulations, employers must keep and maintain 'adequate' records showing that (i) working time (including overtime) for workers who have not opted-out does not exceed an average of 48 hours per week; and (ii) the limits on night work have been complied with. Following a judgement in May 2019, these obligations were increased and the ECJ held that Member States must require employers to set up “objective, reliable and accessible systems enabling the duration of time worked each day by each worker to be measured”. The UK government now intends to reduce “time consuming” and “disproportionate” ways in which employers are required to keep working time records for their workers by removing the requirement on businesses to keep a record of all workers' daily working hours.

Statutory holiday

The government is proposing to permit employers to pay “rolled up” holiday pay. Rolled-up holiday pay is a system whereby a worker receives an additional amount with every payslip to cover their holiday pay, as opposed to receiving holiday pay only when they take annual leave. The practice of paying rolled-up holiday pay was found to be contrary to EU law in 2006 as it was considered that it could deter workers from actually taking their holiday, although, in practice it is still used in certain sectors as a simple way to calculate holiday pay for workers on irregular hours or zero-hours contracts. The government is proposing allowing rolled-up holiday pay to be paid at 12.07 percent of pay, as this is the proportion of statutory annual leave in relation to the working weeks of each year (statutory annual leave entitlement is 12.07 percent of hours worked by a worker).

A further consultation is taking place on merging the UK and EU entitlements to statutory leave. UK workers are currently entitled to 5.6 weeks’ annual leave consisting of 4 weeks' leave derived from the EU Working Time Directive ('basic' leave); and an additional 1.6 weeks ('additional' leave). Different rules apply to the two categories of leave including holiday pay rates, the carry-over of unused leave into the following holiday year and which leave entitlement should accrue or be taken first. In practice, this can cause confusion and administrative difficulties. The consultation makes proposals which are designed to simplify holiday pay for employers, including creating a single annual leave entitlement of 5.6 weeks.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

A TUPE transfer takes place when an organisation, or part of it, is transferred from one employer to another or if a service is transferred to a new provider.

The government intends to remove the requirement to nominate employee representatives when consulting with employees prior to a TUPE transfer where there are fewer than 50 employees in the business and where transfers involve less than 10 employees. Employers will instead be able to consult with employees individually.

Going forward

The consultation on the proposed reforms closes on 7 July 2023 and further information as to the details and timescales of any new changes will be reported once they are published. As of now, businesses who employ people in the UK should bear the proposals in mind as potential future changes to terms and conditions of employment for new and existing employees, and if a TUPE transfer is on the horizon.