What does the Retained EU Law Act mean for Employment?

Many UK employment laws derive from EU law, including regulations covering holiday and working time, agency workers, equal treatment of part-time workers and fixed-term employees, and employer obligations on the transfer of a business or outsourcing (TUPE). The original intention under the REUL Act was that a substantial proportion of EU-derived legislation (including these employment laws) would be revoked at the end of 2023 unless expressly preserved. Thankfully, this approach has now been jettisoned in favour of a list of about 600 measures which will be revoked at the end of the year; our view is that the majority of these are unlikely to cause most businesses significant concern.  However, the REUL Act makes a number of other changes which could have an impact on employment law:

• It removes the principle of supremacy of EU law and provides that domestic legislation takes precedence over retained direct EU legislation, such as UK GDPR; and
• It provides a new route for retained EU case law (currently binding on the UK courts) to be re-examined and potentially overturned.

Apart from a relatively minor measure relating to the working time of tanker drivers, no employment legislation is on the list of measures to be revoked under the REUL Act.  However, in a separate initiative, the Government has recently proposed changes relating to holiday and business transfers.  As explained in this briefing, the changes are likely to be welcomed by many employers, but do not amount to a radical reform. The Government also plans to limit the maximum duration of non-compete restrictions in employment contracts to 3 months – although this is something that it could have done even if the UK had remained in the EU (for more detail, see this briefing). The upshot of this is that the vast majority of EU-derived employment law will remain in place, including measures relating to:

• Working time: minimum annual leave entitlement, maximum weekly working hours, minimum rest breaks and rest periods (Working Time Regulations 1998) – but see this briefing for details of the proposed changes regarding holiday for irregular hours workers.
  
  
• Business sales and outsourcing: automatic transfer of employees on the sale of a business or outsourcing of services, and information and consultation requirements (Transfer of Undertakings (Protection of Employment) Regulations 2006) – but note that some changes are proposed to the rules on informing and consulting employees.
  
  
• Part-time and fixed-term discrimination: rights of part-time and fixed-term employees to parity of terms when compared with full-time and permanent employees (Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002).
  
  
• Agency workers: right for agency workers to comparable pay and benefits terms when compared with directly engaged employees (after 12 weeks), and right of access to vacancy information and collective facilities (Agency Worker Regulations 2010).

In some cases, the UK regulations go further than the EU law which they implement, for example the UK provides for 5.6 weeks' annual leave which is greater than the 4 weeks' annual leave required by the EU Working Time Directive.  There are currently no plans to change this, even though the UK would in theory be free to do so.

Over many years a large body of European case law has built up on which Employment Tribunals rely when considering employment claims under domestic law, particularly in relation to issues of equality.  The REUL Act creates a new route for the principles established by this case law to be reopened, leading to uncertainty for employers on interpretation of the law.  For example, European case law has effectively set out the approach that employers should take in relation to calculating holiday pay and accrual of holiday during long term sickness absence.

Also, certain equal pay claims rely on directly effective EU law (under Article 157 on equal pay for equal work). Unless action is taken to preserve the relevant rights, these will no longer be available once the Act comes into force. Although it will remain possible to bring equal pay claims under similar provisions of UK law, Article 157 is wider in certain respects (for example, it extends to some types of pay which are not covered by the UK equal pay law). It follows that the level of protection in equal pay claims between men and women is likely to be reduced if this directly effective right is not preserved.

For more information on the REUL Act, see our detailed guide.