How the Retained EU Law Bill could impact UK employers

The Bill (42 pages / 1.86MB PDF), designed to remove the special features of EU law that remain in the UK legal system, will see large parts of ‘retained EU law’ repealed automatically on 31 December 2023 – unless ministers decide to preserve or replace them beforehand.

Retained EU law – that is, former EU law that was incorporated into the UK legal system after Brexit – currently covers significant aspects of UK law. Depending on what elements of retained EU law ministers decide to repeal – or ‘sunset’ – by the end of the year, the Bill could cause a significant shift in UK employment rights.

What is in the scope of the sunset provision?

A specific defined subset of EU-derived secondary legislation is in the scope of the sunset provision. From an employment perspective, the 2006 Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is probably the most important piece of legislation that could simply be removed.

However, the list also includes Working Time Regulations, Agency Worker Regulations, Fixed Term Employee Regulations and Part-time Worker Regulations. All of these are pieces of secondary legislation that are derived from EU law. They will all essentially expire and fall off the statute book on 31 December 2023 unless they are preserved, restated or replaced.

Employment rights derived from primary UK legislation are not in the scope of the sunset provision, meaning that the Employment Rights Act and the Equality Act are not impacted directly. However, there are elements even of those acts where provisions are derived from EU laws. Sections of the Employment Rights Act, for example, relate to the provision of employment information to employees – a right that derives from EU law.

The equal treatment provision, which governs aspects of equal pay, is also derived from EU law. Some of the collective redundancy consultation requirements in section 188 of the 1992 Trade Union & Labour Relations (Consolidation) Act also stem from Europe. While these provisions are not directly affected by the sunset provision, they could still be subject to change.

Complicating factors

Historically, the UK government has often added ‘gold plating’ to provisions in secondary legislation that is derived from EU law. In TUPE, the content about service provision changes gold-plates the EU Acquired Rights Directive to give certainty and clarity around how those issues are dealt with in the UK. That is not technically derived from EU law, even though the remainder of TUPE is. Because of this, while some aspects of TUPE could automatically go, others would remain. As things stand, there is no clear policy statement on how ministers will treat all potentially impacted areas of employment law, including the gold plated elements.

The supremacy of EU case law regarding employment rights adds another layer of complexity. For example, a large number of holiday pay cases have been litigated up to the EU level, and a lot of that EU case law is now an important element of how holiday pay is calculated in the UK. It is unclear whether existing case law authorities will bind UK employers after the sunsetting deadline, or whether it will be unwound. These issues may have to be re-litigated after 31 December. 

What will the Bill change?

Although the Bill essentially sweeps away all EU-derived regulations, the government is likely to take a pragmatic view and a swift and wholesale reduction in workers’ rights is not expected. During a parliamentary debate on 1 February, a government spokesperson reiterated that it has “no intention of weakening workers’ rights”. The government has also committed to non-regression provisions under the Trade and Cooperation Agreement that the UK concluded with the EU after Brexit, which decrease this likelihood further.

Ministers might, however, make some change regarding the harmonisation of terms and conditions following a TUPE transfer. This issue generates considerable ambiguity for employers, who would no doubt welcome a solution which allows for terms and conditions to be harmonised post-transfer in a way which provides certainty. 

The government might also remove the 48-hour working week time limit and the accrual of holiday during sick leave. It might also opt to remove protections for agency workers in their entirety. It is also possible that it changes its approach to calculating holiday pay. Ministers are currently consulting about changing the calculation method for part-year workers and it is unlikely that they would do so if they planned to remove the regulations entirely at the end of the year.

Ultimately, however, the ongoing discussion of what employment rights will be changed by the Bill will remain speculative until the government’s policy position is made clear. Employers would benefit from knowing ministers’ approach well in advance of the sunset date. Increased clarity would help to prevent complex, costly and time-consuming issues emerging in 2024.