Government announces changes to employment law

21st June 2023

Since the UK left the EU there has been much debate about what would happen to employment law in the UK. Some feared that many key employment rights of employees would be watered down. We now have greater clarity on the Government’s plans.

On 10 May 2023, the Government published a new policy paper, ‘Smarter Regulation to Grow the Economy’, setting out the measures it proposes in order to improve regulation following the UK’s departure from the EU, whilst maintaining UK labour standards. The policy paper sets out several proposals for reforming employment law post-Brexit, which are not to the scale that some had feared.

The proposed changes, in summary, are as follows:

Working time regulations (WTR)

The Government is currently consulting on the following changes to the WTR:

“Rolled-up” holiday pay to be allowed

As part of the reforms, the Government proposes to allow the use of “rolled-up” holiday pay – the practice where an employer includes an amount for holiday pay in an employee’s hourly rate, rather than paying holiday pay when the employee takes annual leave. This method of pay was most commonly used for casual or temporary workers as a way to make calculating holiday pay easier but is currently prohibited under EU law on the basis that it discourages employees from taking holiday.

This reform, if implemented, will likely be welcomed by schools that employ casual or short-term workers for whom calculation of holiday pay can become an administrative burden.

Statutory holiday entitlements to be merged

As it stands currently, statutory holiday entitlement is spilt between the four weeks’ leave governed by EU rules and the additional 1.6 weeks’ leave governed by domestic rules. The Government plans to combine the two statutory entitlements to create a single statutory annual leave, whilst retaining the same holiday entitlement overall, which will presumably be governed by the same rules when it comes to calculation of holiday pay.

Removing the requirement for record keeping

Under the WTR, employers are required to keep adequate records of the number of hours worked by employees to ensure that they do not exceed the 48-hour per week limit. The Government plans to remove this requirement as it imposes ‘time-consuming and disproportionate requirements on business for working hour records to be kept for all members of the workforce’.


The Government is also consulting on some proposed changes to the consultation requirements set out in TUPE. Currently, businesses with 10 or more employees are required to arrange elections for employee representatives (if they are not already in place) for the purposes of consultation under TUPE. The Government is proposing that businesses with fewer than 50 employees undergoing a sale or outsourcing that results in the transfer of less than ten employees will no longer have to consult with elected employee representatives but can instead consult directly with affected employees.

There is already a “micro-business” exemption under existing law that applies to employers with fewer than ten employees, but this change, if implemented, will mean that slightly larger employers will also benefit from the exemption.

Non-compete clauses

Unrelated to EU law, but with the similar intention of encouraging a more competitive and innovative economy, the Government has announced that it will restrict the duration of non-compete clauses in employment contracts to a maximum of three months.

Non-compete clauses are rarely used in the education sector so this change, if implemented, is unlikely to be of great impact.

Government abandons sunset clause

Whilst not part of the policy paper, in the same week, the Government announced that it is abandoning the controversial sunset clause in the Retained EU Law (Revocation and Reform) Bill which was set to automatically revoke almost all EU law on 31 December 2023. This means that unless a specific EU employment law is repealed, it will remain on the UK statute books until the Government decides to revoke it.

The sunset clause has been replaced with a schedule of approximately 600 items of retained EU laws that the Government intends to revoke on 31 December 2023. Barring two technical measures relating to posted workers, there are no other employment law implications. This will be welcomed news for employers as many were not keen to eradicate all EU employment rights without further consultation.

What this means for schools

Overall, the proposed changes are likely to be welcomed by schools (particularly in respect of holiday pay practices). It is not yet clear when they will be implemented but we will keep schools updated once we know more.

In the meantime, if you have any queries regarding the proposed employment law changes, please contact Hannah Wilding.

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