Government Announcement: Reversal of the ‘Sunset Clause’ in the Retained EU Law (Revocation and Reform) Bill

May 11, 2023

By Nicole Brendel

What is the so called ‘Sunset Clause’?

When the UK left the EU, the Government intended that at the end of 2023, all EU laws and regulations would be automatically revoked, unless laws were specifically passed in the UK to preserve the EU provisions.

Reversal of this clause therefore now means that EU law will in fact remain binding in the UK unless it is expressly repealed, which is a complete U-turn of the previous position.

How does this affect you?

There are thousands of EU laws and regulations that would have been revoked automatically, if legislation had not been specifically introduced to retain certain provisions.

This change in position alleviates the anxiety that a number of protections or other regulatory frameworks will not automatically disappear at the end of 2023. The Government have produced a list of specific legislation they intend to appeal in a 66 page Bill.

Two key areas in relation to employment law

Some proposals are already being considered in relation to employment law which were published in a policy paper entitled ‘Smarter Regulation to Grow the Economy’.

  • Working Time Regulations

Did you know that the holiday entitlement to 28 days (or 5.6 weeks) for full time employees derives from EU law? Under the Working Time Regulations, the entitlement is divided into 20 days of ‘normal leave’ and 8 days of ‘additional leave’ reflective of the usually observed UK bank holidays.

The Government plan to merge the two types to create one entitlement. Given that the current differentiation of normal leave and additional leave perhaps surprisingly can lead to a different calculation of pay depending on what leave is being utilised, as well as anomalies in the entitlement to carry-over leave, it will need to be cleared up how one entitlement will perform in practice.

Furthermore, the Government intend to allow ‘rolled up’ holiday pay meaning that workers can receive holiday pay with every payslip instead of only receiving such pay when holiday is taken which is currently not allowed under EU regulation. This would of course mean calculating holiday pay is easier for workers with no fixed hours presumably reverting back to the position to calculate holiday pay at 12.07% (which was considered unlawful in the recent Supreme Court Judgment). However, caution will be needed to ensure this method doesn’t deter workers from actually taking their leave.

Finally some ‘red tape burdens’ of recording working hours and other administration are set to be removed.

  • Transfer of Undertakings (Protection of Employment) Regulations (TUPE)

The requirement of consultation with appointed representatives is set to be removed where there are fewer than 50 employees in the business and fewer than 10 who are affected by the transfer. Instead, in this situation the employer would be able to consult directly with employees.

Non-Compete Clauses

In continuing the theme to drive economic performance, a further reform has been introduced to restrict any non-compete clauses within a contract of employment to 3 months. This encourages competition as a result of limiting the restrictions on an employee to compete against their previous business to just 3 months, whereas currently (although dependant on reasonable enforceability in practice) an employer can choose to impose a non-compete clause on an employee for as long as they like. Non-solicitation clauses (deliberately taking business from a former employee) are intended to remain unrestricted.

If you need any advice on the above, please contact a member of our employment law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.

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