In this section, we look at how the UK employment law landscape will be affected by our departure from the EU. On 8 November 2023, the Government issued new draft Regulations and its response to a key consultation on holiday pay and working time, both of which will provide clarity for employers in a number of practical areas.

The Retained EU Law (Revocation and Reform) Act 2023 and the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023

Headline points

• The Retained EU Law (Revocation and Reform) Act 2023 gives ministers substantial powers to change and repeal European-derived laws that accumulated during the UK’s membership of the EU. The Act won’t automatically revoke EU-based worker protections, but it does give the Government the power to repeal or make significant changes to existing EU-derived laws.
• In reality, scope for reform is limited by the UK/EU trade deal agreed in December 2020 which commits the UK to a concept of “non-regression” of social and labour protections. There certainly isn’t going to be a ‘bonfire of employment rights’ as had initially been suggested by some commentators.
• The process of amending and re-stating European-derived laws has now commenced with the publication, on 8 November 2023, of the Draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023.
• We set out below the key “need to know” points.

What do we need to know?

• On 8 November, the Draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (“the Draft ER Regulations”) were published in conjunction with the Government’s response to its previous consultations on reforms to retained EU employment law and on calculating holiday entitlement for part-year and irregular workers.
• For those who wish to read into the consultation response, the link is here and it makes interesting reading. Find out more here. We summarise the key points below.
• The Draft ER Regulations are due to come into force from 1 January 2024 and will make a number of changes to current UK employment law as well as re-stating certain EU-derived laws that will remain in place.
• The Draft ER Regulations will make the following changes to existing law:
  • Revoke laws that were introduced during the pandemic that permitted roll over of holiday pay for two holiday years in certain circumstances and introduce a backstop date of 31 March 2024 for carry over of leave under these Covid provisions.
  • Remove the requirement under the Transfer of Undertakings Regulations for employers to inform and consult with elected representatives in a transfer of undertakings (TUPE) situation where they have fewer than 50 employees or where there are fewer than 10 employees transferring, assuming there are not any existing employee representatives already in place. Where there are no employee representatives in place, it will be lawful for the employer to consult directly with employees instead.
  • Remove the current additional working time record keeping requirements for employers to maintain working hours and rest records for all employees even if they work regular hours as long as employers can demonstrate that they have adequate methods of recording working time.
  • Rolled-up holiday pay (following a 12.07% calculation) will become lawful for those who work part-year or irregular hours.
• The Draft ER Regulations will re-state the following existing EU-derived laws on working time to make it clear that these laws will remain part of UK law.
  • Statutory annual leave may be carried over to the following holiday year when a worker is unable to take their leave due to being on family related leave.
  • EU-leave (i.e. 4 weeks of statutory annual holiday entitlement) may be carried forward for a maximum of 18 months where a worker is unable to take their leave due to sickness.
  • EU-leave (i.e. 4 weeks of statutory annual holiday entitlement) may be carried forward where the worker has not been given the opportunity to take their leave or the employer has not informed them that any leave not taken and which cannot be carried over will be lost.
  • The Government has confirmed that, for now, it will retain the two separate ‘pots’ of holiday pay being EU-leave (4 weeks) and UK-leave (1.6 weeks). It has confirmed that pay for EU-leave (i.e. 4 weeks of statutory annual holiday entitlement) will be based on ‘normal remuneration’ which includes commission payments and other payments such as regular overtime payments. This confirms into UK law the principles of holiday pay calculation set down by EU law over recent years. Pay for UK-leave (i.e. 1.6 weeks) will remain as is at basic pay.
• The Draft ER Regulations are likely to provide welcome clarification for employers on the points set out above. In particular, many employers will welcome the fact that it will become lawful to pay rolled-up holiday pay for irregular hours or part-year workers as this has been a point of confusion and debate for many years.

The Equality Act 2010 (Amendment) Regulations 2023

Headline points

• On 14 November 2023 the Government published draft Regulations which will amend the Equality Act 2010 with effect from 1 January 2024.
• The draft Regulations will embed into UK law certain discrimination protections derived from EU law which would otherwise have been lost after the implementation of the Retained EU Law (Revocation and Reform) Act 2023.

What do we need to know?

• Key points that the draft Regulations will confirm into UK law are:
  • The right to claim indirect discrimination on the grounds of association with a protected characteristic. This will provide that indirect discrimination can be made out if an individual is put at substantively the same disadvantage as others who share the relevant protected characteristic.
  • A ‘single source’ test for establishing an equal pay comparator. This means that a comparator can work for a different business as long as the body responsible for setting the terms is the same.
  • Discrimination on the grounds of breastfeeding falls under the protected characteristic of sex.
  • An amendment to guidance on the definition of disability so that consideration of a person’s ability to participate fully and effectively in working life on an equal basis with other workers is relevant when looking at ‘day to day activities’.

The aim of these draft Regulations is to ensure that key anti-discrimination provisions derived from EU law remain in place in the UK.

And finally…Changes to laws on Rehabilitation of Offenders and declaration of custodial convictions

On 28 October 2023, new legislation came into force meaning that criminal custodial convictions for over 18s will become ‘spent’ sooner.  The various time periods that individuals are legally required to declare custodial convictions (i.e. the time periods depending on length of the custodial sentence) have reduced although will be extended in the event of re-offending during the declaration period.

Employers should ensure that relevant systems are updated to reflect the changes to the time periods. The changes do not affect roles which require basic or enhanced DBS checks.

Explore more updates in this issue of Employment Matters below.

Find out more about our Employment & Immigration team, and how they can support you here.