These are uncertain times for UK businesses. Just last month, newly elected Prime Minister Liz Truss promised sweeping employment law reforms, including a “red tape bonfire” of EU regulation. But now that Rishi Sunak has taken over, do employers still need to prepare for this?
The answer is: yes, as the Brexit Freedoms Bill is still being pushed through – meaning that basically all EU-derived employment laws are going out the window. But what exactly will these proposed reforms entail, and how will this impact small businesses?
The bill aims to scrap all EU-retained law by the end of 2023, which includes the Working Time Regulations 1998 (WTR), the Transfer of Undertaking (Protection of Employment) Regulations 2006 (TUPE) and the Agency Workers Regulations 2010.
Despite the name, the WTR cover more than just the ’48-hour work week’ and mandate a range of rights such as:
- Rest break entitlement during shifts of 6+ hours;
- Uninterrupted rest periods of 11 hours each day and 24 hours each week; and
- 4 weeks’ annual leave (topped up to 5.6 weeks’ through separate legislation).
Although the proposal means that the WTR and the rights that go with it could be scrapped, there is likely to be opposition. Any decision to overturn important employment rights when the government has previously promised to strengthen them, is unlikely to be supported by many.
We are seeing an increasing number of employers offering their staff more rather than less, such as hybrid working opportunities or allowing employees to work compressed hours. Employers who implement any proposed reform which significantly curtails employees’ rights may see employees leaving their business to go work for a competitor offering better employee protections and benefits.
Instead, we expect that the government will make more sensible changes in areas such as rules around holiday pay given that these have been the subject of extensive litigation in recent years. Reforms in these areas are likely to be welcomed by businesses. However, given the complexity of this area, this is unlikely to be an easy task for the government.
The TUPE Regulations could also potentially be affected. The latest version of TUPE was introduced in 2006 with the aim of providing rights to employees if the business they work for transfers to a third party.
Despite the government promising to overhaul EU retained law, it is unlikely to remove all the protections TUPE provides, as it is an important legal framework for the transfer of staff. Businesses are in the main familiar with these provisions despite the current rules being complex and technical.
Instead, the government may seek to make the rules more business friendly by extending consultation timings or allowing contractual changes to take place post-transfer.
What about trade unions?
Strike action has increased over the years and is likely to continue to do so particularly given the cost-of-living crisis.
Earlier this year, the government put in place new laws to reduce the impact of strikes. The new laws allow businesses to hire agency workers to plug staffing gaps caused by strike action and increased the maximum damages limit in unlawful industrial action.
Truss wanted to make it much harder for strikes to take place – and Sunak, it appears, intends to do the same. Truss’ proposals to make industrial action more difficult included:
- increasing the minimum notice period for strike actions by two weeks to four weeks;
- introducing a mandatory six-month ‘cooling off period’ after each strike; and
- increasing the ballot threshold for the decision to strike from 40% to 50%.
If these changes still go ahead under Sunak’s government, they will allow businesses to better prepare for a strike due to the extra time, will prevent unions from striking at will within the six-month period after a ballot, and will make it more difficult for a strike to take place due to the 10% increase in the ballot threshold.
In recent months, rail workers, Royal Mail employees, and teachers have all been involved in industrial action, with some happening on the same day. Such reform, therefore, would be positive news for many businesses, as it would result in strike action causing virtually no disruption, which is, of course, the entire purpose of a strike. Strikes are generally unpopular with the public, so we consider this to be an area that the government might maintain a focus on in order to reduce the power of the unions.
With so much uncertainly, employers should watch this space and be prepared for further developments in the coming months.