The post-Brexit employment law shake-up: what’s needed, and what’s likely to happen?

The Retained EU Law (Revocation and Reform) Bill aims to dramatically speed up the process of removing and replacing laws derived from the EU (we’ve written about this in more detail here). The Bill has completed its passage through the House of Commons and is currently going through the House of Lords. It is expected to become law in April or May this year.

Once the Bill passes, the government will gain new powers to reform EU-based laws, including many employment laws. Government departments will need to make decisions quickly because (subject to any changes made by the House of Lords) the Bill contains a “sunset” clause stating that EU-based statutory instruments are revoked automatically on 31 December 2023 unless they have been singled out for preservation beforehand. Many employment laws are found in statutory instruments (including laws on working time, agency workers and TUPE) and are therefore within the scope of the sunset clause.

In practice, the sunset clause operates as a deadline. Employment laws falling under the sunset clause need to be reviewed urgently and any replacement versions must be in place, or decisions made to preserve the existing laws, before 31 December 2023.

The business view on reforming EU employment law

When we asked a sample of businesses (employing over 75,000 employees between them) the overwhelming majority (90%) said they agreed or strongly agreed that the UK should keep most EU-based employment law. Yet there is also support for reform. Over 86% think that UK employment law is about right but some laws need simplifying or modernising and a similar percentage (81%) thought that some laws are over-regulation. This endorses the position we took in our evidence to parliament on the Bill, namely that there are some opportunities for beneficial reform. It’s fair to say, however, that support for reform is currently rather lukewarm. In our survey, 27% of respondents saw “some” overall benefit to divergence from EU employment regulation and caselaw, while 36% saw “little” benefit. On the other hand, 21% saw no benefit at all from divergence, or thought it would be detrimental.

The timeline is a key concern for business. Nearly 70% of our survey respondents thought they would not have enough lead-in time to implement employment law reforms on 31 December 2023 if they are not confirmed until September or October this year (and it seems unlikely that the government can confirm details any sooner than this, given that it will want to consult about them first).

Which EU employment law reforms would be beneficial?

We have drawn up a list of the reforms we think would be most beneficial for business. This is based on our own experience and feedback from employers. In our view, these suggestions would deliver positive change. We would like to see the government considering all of them.

Although this may look like a long list of reforms, it amounts to only a small proportion of the UK’s employment laws. Our list is not about dismantling employment law, it is about improving it.

What is likely to happen and what are the risks?

Given the controversy surrounding the Bill, it is reasonably likely to be amended by the House of Lords before it reaches the statute book. It’s possible that the sunset deadline will be put back, that some laws will be carved out of its scope or that various other amendments will be made. Government departments, however, will already be drawing up their plans for reform based on the Bill as it stands.

One of the major challenges is that we don’t know what those plans are. The government has not published them or revealed any clues about them in the parliamentary debates. We can therefore only guess at what those plans are likely to be. From both a practical and policy perspective, we think the government’s overall strategy will be to keep employment laws rather than abolish them. We do not predict the wholesale dismantling of employment rights. It seems more likely that the government will look to make a number of reforms but keep most of our existing laws.

In our view, the biggest risk of the Bill as it currently stands is not that of employment law vanishing into the night under the sunset clause and leaving a gap. Rather, it is that there is not enough time or resource to make all the necessary reform decisions. This could result in poor regulation and the costs of dealing with uncertainty. It could also, somewhat ironically, result in reforms not going far enough. For example, we think there is scope for modernising collective redundancy consultation requirements and increasing the scope for taking positive action on diversity, but these laws are contained in primary legislation so they are not exposed to the sunset clause and will therefore not be at the front of the queue for review. We therefore hope to see the sunset clause delayed.

Should employers be preparing for the impact of the Bill as it currently stands and, if so, how?  It’s well worth considering the chances of employment reform if implementing new approaches or policies in any of the areas likely to be up for review, such as holidays or working time. Beyond this, however, there is little that employers can do at the moment, apart from watching and waiting.