For an explanation of how the Bill impacts EU-based employment laws and its 31 December sunset deadline, see our article here. In short, regulations that implement EU law are up for review, reform or removal under the Bill. Following our submission of written evidence to the Commons parliamentary committee scrutinising the Bill, we drew up our own manifesto for change. Based on our experience and feedback from employers, we’ve listed the reforms to EU-based employment laws that we think would be beneficial for business because the current law is unworkable, unnecessarily burdensome or outdated.
If the Bill passes, we think TUPE and the Working Time Regulations should be a particular target for reform. Holiday pay also needs to be addressed. We also suggest changes in areas such as collective redundancy consultation and positive action to improve diversity - those laws are in Acts of Parliament rather than regulations so are not up for removal under the Bill but are nonetheless, in our view, ripe for review. There are also many laws up for potential removal under this Bill that we think need to be kept in their entirety, such as the regulations about part-time and fixed term work.
Our proposals cover Great Britain only (not Northern Ireland), are grouped by topic and divided into:
- key priority areas for reform
- potentially less urgent reforms and/or reforms where there may be less consensus among employers over the right approach
- provisions of key statutory instruments which we think should be restated or preserved rather than allowed to disappear under the proposed sunset clause
Click on the topics below to explore our proposals:
1. Adopt principle that holiday entitlement builds up in step with time worked
The current entitlement of 5.6 weeks does not include a clear system for pro-rating or cater for modern flexible working patterns e.g. working part of the year or different shifts each week (as illustrated by the litigation in Harpur v Brazel). Holiday entitlement should be proportionate to time worked and build up in step with it. Employers should be allowed to express holiday entitlement as accruing at 12.07% of hours worked (or perhaps another percentage), at least where working time is not known in advance. (New government consultation on this topic is a positive step forward).
2. Allow rolled up holiday pay (e.g. at 12.07%)
Rolled up holiday pay (e.g. at 12.07%) should be allowed, at least for casual workers who only work occasionally, in line with the Taylor Review recommendations (see p47) and revoking the ECJ decision in Robinson-Steele. The government should consult on safeguards (e.g. to ensure that rolled up holiday pay is a genuine and separately itemised supplement and the worker gets at least 5.6 weeks off each year).
3. Consult on expressing holiday entitlement in days/hours not weeks
Thought should be given to whether holiday allowance should still be expressed in weeks, since this does not reflect the reality of how holiday is taken and there is uncertainty over how to translate 5.6 weeks into days or hours for workers with irregular working patterns, leading to lack of clarity. It may be more helpful, e.g. to adopt the starting point that holiday entitlement for an employee working 5 days each week throughout the year is 28 days.
4. Consult about holiday and sick / maternity leave
It might be better to boost maternity and sick pay rather than employees returning with “missed” holiday stored up and rights to carry it over (as required by ECJ decisions in Merino Gomez & Stringer / Schultz-Hoff). The government should consult on options. At least carry over should be time limited and employers should be allowed to make payments in lieu of holiday missed due to maternity or sickness.
5. Consult about falling sick when on pre-booked holiday
If someone falls sick on pre-booked holiday, ECJ caselaw says that (EU-derived) holiday can be rescheduled (e.g. Pereda v Madrid) but this should arguably be a matter for employer discretion rather than legal entitlement.
6. Clarify that holiday can never be carried forward for more than 2 years
In King v Sash Windows / Smith v Pimlico the ECJ ruled that individuals engaged as self-employed who later establish worker/employment status can bring a claim for unpaid holidays stretching across the whole period of their engagement. This is at odds with UK government policy that claims should be limited to 2 years and should be clarified.
7. Clarify and simplify rules on what's included in holiday pay
Salaried employees should receive normal basic pay during holidays. Employees working shifts and whose pay varies accordingly should have holiday pay calculated on average pay including shift premia/allowances. The rules around this should be simplified and clarified. The government should clarify the law on overtime and commission (under Lock v British Gas).
8. Clarify meaning of working time
This is particularly important as work becomes more flexible e.g. gig economy multi-apping. The government should also consult on whether to retain or revoke ECJ caselaw including Radiotelevizija Slovenija (stand-by time was not working time unless constraints significantly impacted free time), Jaeger (on call duty requiring doctors to stay at hospital was working time), Tyco (travel to and from home was working time for workers without fixed workplace) and BX v Unitatea Administrativ Teritoriala / EC v Ireland) (whether time spent training counts as working time).
9. Clarify rules on compensatory rest for interrupted rest periods
In some circumstances, employees who are required to work during what would have been their rest period or break are entitled to compensatory rest, but there is ongoing uncertainty about whether the amount of compensatory rest should equal the length of interruptions or the entire rest period, whether it needs to be taken during working time and whether it must be given immediately. This should be clarified.
10. Consult on exempting lower risk roles from working time limits
The government should consult on introducing more flexibility in working time limits for workers in roles which carry lower risk (those roles would be for consultation) e.g. workers could opt out of the limits or agree to compensatory rest instead.
11. Clarify rules on recording of hours worked
The UK rules do not require specific records of hours worked although the ECJ ruled in CCOO v Deutsche Bank SAE that the Working Time Directive mandates this. The position should be clarified.
12. Maintain annual leave level
There should be no reduction in the overall basic holiday allowance (although we suggest consulting about expressing it as 28 days rather than 5.6 weeks).
13. Retain 48-hour week and ability to opt out
The 48-hour working week and ability to opt out should be retained.
14. Restrict TUPE to employees (not workers)
The Employment Tribunal in Dewhurst said the EU Acquired Rights Directive requires that TUPE applies to “workers” as well as employees - but workers may owe no ongoing obligations to the company, may not operate under its control, have no unfair dismissal rights and are difficult to consult if they only work occasionally. TUPE was not intended to protect these individuals and their inclusion attracts complexity and disputes.
15. Confirm that employment can only TUPE transfer to one employer
The ECJ in ISS Facility Services v Govaerts ruled that a full-time employment contract can be split between new employers in proportion to tasks performed, but this is impractical (particularly where the new employers are competitors) and arguably detrimental to employees who may not want multiple part-time employments.
16. Allow individual consultation for micro-TUPE transfers
Transferring just two employees in an employer with no recognised union currently attracts the obligation to invite the election of representatives. The micro-business exemption (below) should apply to micro-transfers.
17. Remove special restrictions on changing terms after a TUPE transfer
Employees tend to expect change after a transfer and there may be sensible business reasons for harmonising terms with the existing workforce. The current requirements for an “ETO reason” plus employee consent, or contractual flexibility clause, are too restrictive and result in uncertainty. If special restrictions are retained, they should be time limited (e.g. up to one year after a transfer).
18. Remove need for special ETO reasons for TUPE redundancies
The current requirement for an “ETO reason” tends to result in redundancies being artificially deferred until immediately after the transfer (so they can be implemented by the incoming employer with an ETO reason) or taking place beforehand with complex settlement agreements or needless litigation. Employees rarely benefit. Special ETO reason requirements should be scrapped, or at least outgoing employers should be able to rely on incoming employers' ETO reasons.
19. Remove requirement to give agency worker usage info in every TUPE transfer
The current requirement on employers to tell employees affected by any TUPE transfer about the company's use of agency workers is jarring and confusing. It tends to be forgotten altogether (resulting in a legal breach) or accompanied by an explanation that the information is legally required even though it has no bearing on the situation.
20. Clarify point in time when TUPE transfer happens
The ECJ in Celtec Ltd v Astley ruled that the date of a transfer is a fixed point in time, which cannot be postponed by agreement, but it's unclear how this fits with regulation 3(6) of TUPE (where a transfer may be effected by a series of transactions) and this causes disagreements in service provision changes.
21. Define micro-business as 20 employees (up from 10)
Micro-businesses employing under 10 people can consult employees individually about a transfer, rather than needing to have representatives. The threshold should be increased to 20 which would match the threshold for requesting statutory trade union recognition and reduce burdens for very small businesses.
22. Allow settlement agreements for TUPE claims
Claims about collective information and consultation obligations under TUPE cannot be settled under a normal settlement agreement (on which individuals are required to take independent legal advice), which makes little sense when they can in fact be settled by Acas COT3 (where no legal advice is required).
23. Remove need to elect reps when transfer involves no measures for employees
TUPE currently requires employers to provide collective-level information even if there won’t be collective-level consultation because no measures are proposed. Some employers are therefore required to run an election purely so that a letter can be sent (or otherwise face punitive fines).
24. Clarify rules on interpreting post-termination restrictions after TUPE transfers
Post-termination restrictions in the employment contracts of transferring employees are interpreted too narrowly/literally (as illustrated by one case where the definition of 'group' was interpreted to mean the outgoing employer's group only). This puts the incoming employer at a disadvantage because it must honour the transferring employee's contractual terms but can't be sure of relying on post-termination restrictions which would ordinarily be a key tool for protecting its business.
25. Align penalties across TUPE and collective redundancy regimes
The penalty for breaching collective information and consultation obligations in a TUPE transfer is 13 weeks' pay, whereas it's 90 days' pay for breaching the same obligations in relation to collective redundancies. This should be aligned.
26. Remove TUPE collective consultation requirements from insolvent liquidations
Where a company is being liquidated and its business purchased, the rules on automatic TUPE transfers are disapplied, there are no transferring employees and no transferee employer to provide information about post-transfer measures, but the obligation to inform and consult remains. This makes no sense. The requirement should be removed and replaced with a requirement to provide information to affected employees directly.
27. Consult about pension rights in TUPE transfers
The current rules cause confusion and this would be a good opportunity for a review.
28. Retain core principles of TUPE
Apart from the reforms suggested above, TUPE provides important certainty for business and protection for employees and should be retained.
29. Clarify that clock does not restart on redundancy consultation if a second batch of redundancies is proposed.
The ECJ ruling in UQ v Marclean Technologies suggests that employers may need to restart the clock on consultation with individuals where redundancy discussions may be advanced or even concluded if a further batch of redundancies is proposed tipping the total numbers over the threshold for collective consultation. It should be clarified that retrospective consultation isn't needed if later redundancies arise.
30. Update agenda for collective redundancy consultation
The current topics for consultation are out of date. For example, they do not currently include a requirement to discuss retaining or reskilling the employees if jobs are being lost due to the introduction of new technology.
31. Reform concept of establishment for collective redundancy purposes
Collective consultation obligations apply if an employer proposes at least 20 redundancies “at one establishment” in a 90-day period. An “establishment” is an EU concept meaning the site or unit to which employees are assigned. It needs updating, for example to clarify which site remote workers should be assigned to.
32. Allow settlement agreements for collective redundancy consultation claims
As with TUPE (above), claims about collective redundancy consultation cannot be settled under a normal settlement agreement (on which individuals are required to take independent legal advice) which makes little sense when they can be settled by Acas COT3 (where no legal advice is required).
33. Remove or reform HR1 requirements
HR1 forms are designed to let local job centres know about redundancies but it’s doubtful that any benefit justifies the administrative burden, and they are arguably less meaningful now that those facing redundancy may be working remotely and scattered across the country. They should be scrapped or, at the least, penalties should be decriminalised (and potentially replaced with civil fines), the threshold raised from 20 to 100 redundancies and the unnecessary requirement to provide a copy to the employee reps removed (as they receive the relevant information through the collective consultation process).
34. Standardise collective redundancy consultation at 30 days
Collective redundancy consultation must start “in good time and in any event” at least 30 or 45 days before the first proposed dismissal (depending on numbers proposed). The “good time” requirement should removed - it's uncertain and businesses tend to simply adopt a 30/45 day period given cost pressures. Consultation should also be standardised at 30 days - a consultation on 100+ redundancies need not take any longer than one on 20 redundancies.
35. Consult about fire and rehire
The government should consult on reforming the concept of “redundancies” so that “fire and rehire” is no longer caught (such as by adopting the UK definition of redundancy in the Employment Rights Act 1996). Some kind of alternative collective consultation may be necessary in this situation but it's unhelpful and confusing that such situations are currently labelled redundancies for collective redundancy consultation purposes.
36. Standardise who to consult over collective redundancies, TUPE and listed pension changes
Unions currently have priority status for consultation about collective redundancies and TUPE but not for consultation over pension changes. This should be standardised.
37. Clarify HR1 rules for ships
If HR1 obligations are retained at all, the rules on which country’s authorities need to be notified of redundancies on ships should be reformed following the P&O Ferries situation.
38. Consult on reforming agency worker entitlement to matching bonuses
The requirement to match performance-related bonuses can be unreasonably onerous in some sectors, whereas the lack of requirement to match company-wide bonuses (e.g. Christmas bonuses or cost of living payments) can seem perverse when generally agency workers are a more vulnerable group. The government should consult on reform.
39. Reform and clarify agency worker entitlement to matched annual leave
There is often uncertainty around whether extra bonus days (extra bank holidays, office closure days etc) should be matched. As agency workers are used as a flexible workforce, in some scenarios it makes little sense to have to match these types of term.
40. Reform duty to provide information to agencies about pay and conditions
The general duty to provide extensive information to agencies about pay and conditions is often a point of contention if the business reasonably considers such information to be sensitive or confidential.
41. Consult on exempting higher-paid agency workers from some protections
As a compromise between reducing the impact of these regulations for business but maintaining the protection of vulnerable workers, the government should consider consulting on focussing protection on those below a certain wage threshold.
42. Retain core principles of agency worker protection
The regulations serve a valid purpose in limiting exploitation of potentially vulnerable workers, and should be retained and restated, but with some amendment to the details.
43. Consult on making it easier to take positive action as part of levelling up initiatives
Many employers want to take measures to address underrepresentation of e.g. particular racial or ethnic groups. Some levelling up measures such as reserving places on shortlists or allocating paid work placements are not permitted positive action because of the relationship between section 158(4(b)) and section 159(3) Equality Act 2010. The section 159 provisions (known as the ‘tie-breaker’) are seldom used, given the requirement to conclude that two candidates are “equally qualified” and the prohibition on policies of preferring candidates from protected groups. The government should consult on reforming the tie-breaker. Consultation should also address whether more favourable treatment (positive discrimination) should be allowed if justified as a proportionate means of achieving a legitimate aim (potentially limited to work experience or training/mentoring schemes) and allowing quotas in some circumstances (e.g. for board positions).
44. Change how to calculate employee numbers for determining if information and consultation regulations apply
The ICE regulations apply to employers with at least 50 employees. The rules for calculating numbers reference whether the employee works 75 hours a month or less, but an employee still has an interest in the operation of the business irrespective of their number of working hours and this test makes it difficult for employers to determine if the regulations apply to them. The rules would benefit from reform.
45. Remove option to send requests for information and consultation arrangements to the CAC rather than employer
This would enable employers to know if there is mounting support for an information and consultation arrangement, enabling it to react to the views of its workforce in real time, including by voluntarily putting in place a pre-existing agreement.
46. Simplify requirements for approval of negotiated information and consultation agreements
A negotiated deal should be approved if most negotiating reps agree it. It is unnecessarily burdensome to require unanimity of negotiating reps or for a deal to be put to employees to vote on when they have already elected people to represent their interest.
47. Expand standard information and consultation framework
The standard framework in regulation 20 sets parameters for negotiations (because its contents will apply in the absence of an agreement) but is incomplete. For example, the regulations give no indication of how frequently meetings must take place (old government guidance suggests once a year should be sufficient but this calls into question how meaningful the body is). This creates unnecessary legal risk because employers don’t know what they need to do to comply with their obligations.
48. Remove old transitional wording from information and consultation legislation
The regulations should be amended to clarify that they apply to employers with at least 50 employees. The higher thresholds, which applied as part of transitional arrangements between 2005 and 2008 should be removed from the face of the legislation (by updating regulation 3 and removing schedule 1) because their retention is unnecessary and confusing.
49. Modernise section 1 statements
Section 1 requires employers to provide statements of employment particulars. Written statements now often sit alongside lengthy and legalistic contracts of employment. The government should consult on a new obligation to provide core terms in plain English. If section 1 statements are kept, the rules would benefit from modernisation. For example, they tend to assume the employee is given a hard copy and require some particulars to be included in a single document, but employers should be allowed to provide information in a more layered way with options to refer or link to more detail.
50. Reform level of detail to be provided
Section 1 is uneven. Some particulars can be provided at a high level (e.g. remuneration) whereas others require potentially a lot of information (e.g. any terms and conditions relation to holiday). Employees arguably want short and useful summaries, not lengthy and unbalanced detail.
51. Remove unnecessary requirements
The requirement to list “other benefits” covers things like gym membership or contributions, occasional bonuses, counselling support. This is over-regulation.
52. Remove requirement to specify particulars that do not apply
If there are no particulars to be provided, that fact generally needs to be stated. For example, an employee working in a local shop needs to be told that there are no particulars requiring them to work outside the UK for a period of a month or more. This is excessive and causes confusion about the implications.
53. Repeal regulations on European Works Councils (and other Europe-wide bodies)
The current concept of running UK-law versions of Europe-wide bodies (such as European Works Councils) makes no sense and risks putting employee reps in impossible positions. The European Public Limited Liability Company (Employee Involvement) (Great Britain) Regulations 2009 (plus NI equivalent) and Transnational Information and Consultation of Employees Regulations 1999 need complete repeal. Laws enabling UK employees to be represented on EU-law bodies (e.g. rules on electing UK employee reps, protection from detriment and confidentiality) are sensible and could be added to the Information and Consultation of Employee Regulations 2004. The European Cooperative Society (Involvement of Employees) Regulations 2006 should be scrapped as the European Cooperative Society Regulations have been repealed.
54. Reform requirement to recalculate statutory maternity pay for any pay rise
Regulation 21(7) of the SMP regulations 1986 was inserted after the ECJ decision in Alabaster and currently results in the whole of an employee's SMP having to be recalculated if they receive a pay rise at any point during maternity leave. This is confusing, illogical and goes further than was required by Alabaster. Any pay rise awarded to an employee on maternity leave (or that they would have received if not on maternity leave) should increase SMP only from the time when the pay rise takes effect.
55. Retain maternity and parental leave regime but plan to reform at later date
There is an opportunity to consider wholesale reform of the UK’s family leave and pay system to create a more modern and much less complex system. These reforms could provide much simpler pots of leave and pay for parents and incentivise more fathers to take time off to look after their babies. Wholesale reform would, however, be a significant undertaking so may be best left until later when other reforms have bedded in. We have not commented more generally on reforms to health and safety law but the provisions relating to new and expectant mothers should be retained.
56. Restate Part-time Workers Regulations 2000
We do not think these regulations cause issues in practice and think they should be retained.
57. Restate Fixed-term Employees Regulations 2002
We do not think these regulations cause issues in practice and think they should be retained.