Government responds to CBI calls for targeted retained-EU law reform

In the first half of this year the CBI convinced the government to change its approach to the Retained EU Law (REUL) Bill. As proposed, the Bill’s ‘sunset-clause’ would have resulted in as many as 4,000 pieces of REUL legislation – spanning areas as diverse as employment law, intellectual property, health and safety, and the environment – falling off the statute book, causing legal uncertainty and damaging business confidence.   

The final Act instead made only a small number of targeted changes to legislation, as well as providing the government with considerable new powers to amend assimilated EU law in the future with ease.

Changes to the Working Time and Transfer of Undertakings regulations show that careful employment law reform can boost competitiveness…

While making the case for the government to drop the ‘sunset clause’, the CBI argued that there were opportunities to reform REUL in a pragmatic way that can reduce regulatory burdens on businesses.

Two areas that have stuck out for years as ripe for amendment are the Working Time Regulations (WTR) and the Transfer of Undertakings Regulations (TUPE).

Although the core tenets of both must be retained to ensure fairness for employees and clarity for employers, both have been difficult and complex for UK businesses to navigate since their adoption.

The government has responded to the CBI’s arguments by committing to:

• Remove the requirement to implement a “an objective, reliable and accessible” system for recording hours worked by each worker each day, as demanded by recent EU-case law. This will remove considerable uncertainty and the disproportionately high cost of implementing such a system for business.
• Introduce “rolled-up” holiday pay for irregular-hours workers and part-year workers. This will allow employers to include an additional amount with every payslip to cover a worker’s holiday pay as opposed to them receiving holiday pay only when they take annual leave.
• Remove unnecessary consultation requirements during TUPE transfers by allowing small businesses (with fewer than 50 employees) and businesses of any size undertaking a small transfer (of fewer than 10 employees) to consult directly with their employees if there are no existing worker representatives in place.

These changes are entirely sensible and will help address prevailing economic challenges by freeing business resources that can be better allocated to growth. The government intends for them to come into force on 1 January 2024.

…and there are other areas of REUL reform the government should explore.

Although the government has rightly closed the door on wholesale changes to most REUL, the CBI believes it should consider if there are further measures that could be brought forward to improve it and the employment law framework as the world of work continues to change.

The CBI has previously called for changes to TUPE that would allow for “reasonable harmonisation” of employee terms in transfers, on the condition that no employee sees a regression in the overall value of terms they had at the point of transfer. This change would help alleviate the issues caused by the two-tier workforces that often result from transfers, thereby reducing administrative burden whilst supporting more productive workforce management.

If you have views on the government’s recent changes to REUL or on further areas you believe the CBI and government could usefully explore in this area, please contact Laurence Reaburn-Smith, Senior Policy Adviser for the Future of Work & Skills.