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Stick Or Twist? What The UK’s Brexit Freedoms Bill Might Mean For UK Employment Law

19 January 2023

Seyfarth Shaw LLP

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Some UK employment laws could be set for a shakeup after 31
December 2023, as part of the post-Brexit legal reform envisaged by
the government’s “Brexit Freedoms Bill.” The precise
impact of this Bill, including which of its powers will be
exercised and to which legal areas, remains unclear. However, given
the EU genesis of so many UK employment laws, global employers with
UK operations should have on their radar the possibility of
significant employment law reform.

What is the Brexit Freedom Bill?

The Retained EU Law (Revocation and Reform) Bill, also known as
the “Brexit Freedoms Bill,” will result in the removal
from UK statute books of certain laws that were retained from the
EU following Brexit. Unless restated or replaced by 31 December
2023, many of these EU laws will automatically lapse (known as
“sunsetting”—see below).

Employment is an area of UK law that has strong EU links, such
as laws on business transfers, maternity and parental leave, fixed
term employment, etc. However, the government is yet to indicate
how it plans to address retained EU employment laws, meaning there
is considerable uncertainty as to what the legislative landscape
will look like after 2023.

What will be the consequences of the Brexit Freedoms Bill?

From the end of 2023, the Brexit Freedoms Bill will result
in:

  • Certain EU laws being revoked, unless:
    • The government exercises its right to extend this deadline to
      June 2026, which is currently unlikely.
    • They have been restated as UK law. The power to restate does
      not provide much flexibility to change the wording of the law, but
      it does provide the ability to clarify or consolidate it.
    • They have been replaced with a new UK equivalent, which does
      not need to be interpreted in line with EU law. Such replacement
      legislation cannot, however, increase the law’s regulatory
      burden.

It is important to note that this “sunsetting” does
not apply to all law derived from the UK’s time in the EU. By
way of example, most of the Equality Act 2010, which provides the
framework of protections against discrimination, will be out of
scope of these sunsetting powers. Conversely, regulations on agency
workers, part-time employment, and some health and safety rules are
examples of areas that could potentially be sunsetted.

  • The removal of some directly effective rights and obligations
    provided under EU treaties and directives.
  • It becoming easier for UK courts to depart from case law
    derived from the Court of Justice of the EU, as well as the general
    principles of EU law (such as proportionality).
  • EU law no longer having supremacy over domestic UK law.

Which employment laws have the greatest probability of being
impacted?

We anticipate that the most likely changes will be in relation
to:

  • The average weekly working hour limit of 48 hours, under the
    Working Time Regulations 1998. This might be lifted or amended,
    although, in practice, the impact could be minimal, given that
    employees typically consent to opt out of this limit during their
    onboarding.
  • Rules applying to the automatic transfer of employment
    following company acquisitions/mergers (known as “TUPE”).
    In particular, current restrictions on the ability to change the
    terms and conditions of transferred employees can impede or
    undermine the post-acquisition integration of businesses.
  • Holiday pay and entitlement. There is currently considerable
    uncertainty in this space, such as in respect of rollover rights,
    whether variable pay must be factored in, etc.

We do not currently anticipate that there will be a widespread
move to deregulate the employment space, particularly as both the
current government and opposition parties are in favour of
introducing certain new pro-employee rights. For example, various
non-EU legislation is currently being considered in respect of
flexible working requests (a day-one right to make the request,
etc.), sexual harassment (including employer liability for third
party harassment of employees), and various “family
friendly” rights (including new leave rights and an extension
of family leave-related redundancy protection).

Next Steps

Hopefully, as 2023 progresses we should get greater clarity from
the government on their proposed plan of action, so employers with
a UK presence are well advised to keep the Brexit Freedoms Bill
firmly on their radar.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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