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Government abandons ‘sunsetting’ provisions of Retained EU Law Bill

Written on 12 May 2023

In a move many had anticipated, the government has U-turned on its plan to automatically revoke most retained EU law at the end of 2023 via the controversial Retained EU Law (Revocation and Reform) Bill.

Despite Prime Minister Rishi Sunak promising to review or repeal EU laws in his first 100 days in office, the so-called “bonfire of EU laws” received backlash from businesses, who warned of serious regulatory uncertainty. In recent weeks, Conservative Party MPs and members of the House of Lords have also pushed back on the Bill, much to the dismay of hardcore Brexiteers.

In a written ministerial statement on 10 May, the business and trade secretary Kemi Badenoch acknowledged that automatically scrapping EU-derived laws through a sunset clause in the Retained EU Law Bill would pose “risks of legal uncertainty”.

So where does this leave employers, who were anticipating the “biggest shake-up of employment law in recent times”? First, let’s recap what the Retained EU Law Bill is and how it’s evolved.

What is the Retained EU Law Bill?

A good proportion of UK law – between 13 and 60%, depending on the source – comes from the European Union. To minimise disruption after Brexit, the UK converted these EU-derived laws into domestic law and called it “retained EU law” (REUL).

The Retained EU Law Bill, introduced in September 2022 by then BEIS Secretary Jacob Rees-Mogg, is the government’s plan for what will happen to these laws going forward.

If passed, it will give the government the power to change or remove retained EU law, potentially affecting the likes of TUPE, the Working Time Regulations and the Agency Workers Regulations. Under the Bill’s original provisions, all of these well-known laws would automatically fall away on 31 December 2023 unless the government legislates to keep it before this date.

The Bill would also end of supremacy of EU law, potentially discarding 50 years’ worth of case law. This would mean that concepts familiar to many employers and HR professionals – such as what constitutes holiday pay and how to establish worker or employee status – would be reset and could potentially be fought about all over again.

The purpose of the Bill, according to the government, is to “ensure regulations are tailor-made for the UK to deliver maximum benefit to citizens and business”. However, naturally, the prospect of a wholesale clear-out of any EU-related legislation raised significant concerns for many – not least business owners – prompting the government to rethink its plan.

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Is the Retained EU Law Bill still going ahead?

The Bill is still going through Parliament; however, ministers quietly confirmed that they are scrapping the Bill’s “sunset clause” – the part of the Bill that would trigger mass deletion of retained EU laws on 31 December.

Without this clause, all retained EU laws will now remain in force, unless a decision is taken to revoke or change them. According to Kemi Badenoch, this will mean that fewer than 600 laws will now be revoked under the Bill (although in the House of Commons on Thursday 11 May 2023, she suggested that by the end of the year, more than 2,000 pieces of REUL will have been repealed), as opposed to the 4,000 or so originally on the chopping block.

What employment laws will still be repealed?

Following the announcement, the government has published a list of the retained EU laws that it still intends to revoke under the Bill at the end of 2023. From an employment law perspective, there appears to be just a few, and they are quite obscure:

  • The Community Drivers’ Hours and Working Time (Road Tankers) (Temporary Exception) (Amendment) Regulations 2006, which allow drivers of road tankers transporting certain materials to work longer hours and take shorter rest periods than normally required under EU law, in order to transport essential supplies such as fuel during a national emergency.
  • The Posted Workers (Enforcement of Employment Rights) Regulations 2016, which require employers to pay posted workers at least the minimum wage in the country where they are working, and to provide them with certain working conditions, such as rest periods and maximum working hours.
  • The Posted Workers (Agency Workers) Regulations 2020, which aim to ensure that the rights of agency workers are protected when they are sent to work in another EEA country where they do not usually work.

Does this mean all other employment laws are safe?

For now, perhaps. However, while the sunset clause has been scrapped, the government is still driving for deregulation post-Brexit.

At the same time as backtracking on the sunsetting provisions of the Retained EU Law Bill, the government announced “improvements to employment law which could help save businesses around £1 billion a year, while safeguarding the rights of workers” in a new policy paper, “Smarter Regulation to Grow the Economy”. These “improvements” include some potentially significant changes to employment law, namely:

  • TUPE. Currently, employers with no appropriate employee representatives can only inform and consult employees directly in relation to a TUPE transfer where they employ fewer than 10 employees in total. The government will consult on broadening the exemption to small businesses (with fewer than 50 employees in total) where the transfer affects fewer than 10 employees.
  • Non-compete clauses. The government is proposing to limit the length of non-compete clauses to three months. The policy paper states that this will not interfere with the ability of employers to use (paid) notice periods or garden leave, non-solicitation clauses or confidentiality clauses. There is, however, no mention of non-dealing clauses. No details have been provided as to whether they will have to be retrospectively applied, but this could have a serious impact.
  • Working Time Regulations (WTR). The WTR may be reformed this year and the government will be consulting on proposals to remove the requirement for employers to keep records of all individuals’ working hours. It will also look to simplify holiday pay by introducing rolled-up holiday pay and merging the current four weeks’ EU-derived annual leave entitlement with the additional 1.6 weeks’ statutory annual leave.

What about health and safety laws?

The majority of the UK’s health and safety legislation is derived from the EU. Because of this, the Retained EU Law Bill was set to shake up the world of health and safety as we know it.

In fact, health and safety was one of the main policy areas affected by the Bill’s sunset clause. Almost 60 pieces of legislation – including the UK’s six main health and safety regulations that came into effect following EU directives issued as far back as 1993 – were potentially on the chopping block, leaving only the Health and Safety at Work etc Act (HSWA), the UK’s primary piece of legislation, in force.

Naturally, this was met with concern from businesses, who faced being plunged into uncertainty around the standards expected. Moreover, because EU-derived health and safety regulations are more stringent than the HSWA and go beyond what domestic law requires, there were fears of putting worker health and safety at risk. 

However, much to the relief of many, the government’s recent U-turn provides reassurance that no health and safety laws are being targeted for elimination – for now, at least.

What happens now?

The amended Retained EU Law Bill will likely go back to the House of Lords for its report stage, so for now, employers are left to wait and see what that means in practice and how it progresses through the House of Lords. There are still likely to be issues with Clause 15 – so called “Henry VIII” powers – and what happens in respect of previous European Court of Justice decisions.

The removal of the sunsetting provisions is very welcome across the board, since this left businesses to deal with a cliff edge whereby it wasn’t known what laws would remain in place in 2024. There are still questions, though, about what changes to employment law will be made and how this will happen, since on the face of it the Bill appears to still retain a significant amount of power for the government to make changes, arguably without much Parliamentary scrutiny.

We will watch with interest how this progresses through the House of Lords.

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