Changes afoot, employers take stock: key 2023 HR updates, post-Brexit reform, and how to prepare for the unknown

Hot off the heels of HRH King Charles III’s coronation, the government have announced several proposed changes to employment law to “safeguard” workers’ rights and save businesses an estimated £1bn per year. This is a welcome step, following a notable radio silence in respect of last year’s anticipated “Employment Bill”.

Employers should be aware of these changes, take heed now, and start implementing steps within the workplace to anticipate what is to come. Good employers should also ensure that all HR policies are up to date (we touch on this below), to account for recent practical issues in the workplace sparked by the royal coronation and other developments.

A run through of the key changes, as well as advice on good practice, is below.

1- Regulatory reform? Working Time Regulations (WTR) to change…

As part of the government’s wider “vision” to grow the economy, they have proposed a few changes to the WTR. Whilst the intention is for these changes to be rolled out this year, they are subject to consultation:

A- Rolled up holiday pay to be introduced – this means that employers can spread holiday pay for workers over the year by adding an amount on top of the worker’s normal hourly rate, rather than paying the workers for time off as and when taken. As things stand, rolled up holiday pay is unlawful, and employers should not be doing this in practice; workers should be paid holiday pay when annual leave is taken. The proposed introduction of rolled up holiday pay is probably welcome to most employers, as it offers a practical way to deal with holiday pay and entitlement for workers on zero hour contracts, agency workers, and other atypical workers. It can be tricky to calculate. Workers, on the other hand, may feel deterred from taking annual leave. 

B- Merging the EU holiday entitlement (4 weeks) with the additional 1.6 weeks’ holiday provided for under UK law – this would mean all workers are entitled to a single statutory holiday entitlement of 5.6 weeks (or 28 days’ holiday), rather than 4 weeks plus 1.6 days. It doesn’t change much in practice and unifies workers’ separate entitlements under EU and UK law.

C- Remove employers’ need to maintain adequate records showing compliance with working time obligations in respect of every worker.

2- TUPE – changes to “inform and consult” practices

As the law stands, where there is a valid “business transfer” or “service provision change” for the purposes of TUPE (the Transfer of Undertakings (Protection of Employment Regulations 2006), employers are not required to directly consult with affected employees unless the employer has less than 10 employees. Employers with more than 10 employees must inform and consult with “appropriate representatives” of employees (being recognised trade union representatives or employee representatives). 

As part of its proposed reforms, the government are planning on allowing employers with fewer than 50 employees to inform and consult with the affected employees directly (rather than through “appropriate representatives”) also directly. It is not yet clear when this change is expected to be enforced.

It could make the TUPE process easier to manage for employers (at least internally). HR policies could be updated to account for this.

3- No more non-compete (at least, for longer than 3-months!)

The government have proposed to limit the length of non-compete clauses to a maximum of 3 months. 

There is no statutory limit to how long an employer can restrict an employee from working for a ‘competitor’, though non-compete clauses in practice tend to range from 6 to 12 months (particularly in the case of senior employees). The proposed reform, and ‘new’ statutory limit, is in line with a seemingly global shift from non-compete clauses in employment contracts. 

For employees, this appears to be a much-heraldedchange. It means there is less restriction on them applying for a new job post-termination closer to any termination date. It also gives much needed certainty to employees in negotiation.

Employers’ ability to use paid notice periods or place employees on garden leave appear to be unaffected by this proposed change, as will the use of non-solicitation clauses. 

This proposal is one to watch and until any further news (the government are not particularly known for their speed in enforcing employment law reforms), employers are within their rights to implement non-compete clauses with a longer duration than 3-months. Whether that can be enforced in future is likely a case of wait and see for employers. 

4- Post-Brexit reform

The government has done a U-turn on its previous plans to revoke all EU legislation automatically unless expressly enshrined in UK Law (see Retained EU Bill) by the end of 2023.

The government have now indicated that only those laws expressly identified by them at the end of 2023 will be revoked and all other retained EU law will remain in place. On the employment law front, there is nothing key which is to be repealed with only the following set to be revoked:

– The Community Drivers’ Hours and Working Time (Road Tankers) (Temporary Exception) (Amendment) Regulations 2006;

– The Posted Workers (Enforcement of Employment Rights) Regulations 2016; and

– The Posted Workers (Agency Workers) Regulations 2020

5- HR headache? Next steps

The above reforms do not mean that HR policies and suites need to be updated just yet…

The royal coronation, however, and recent developments in employment law do pose topics which HR, employers, and workplaces could be thinking about now:

A- Dealing with additional or unprecedented bank holidays – the death of HRH Elizabeth II and the subsequent coronation have introduced two new bank holidays into the fold. Whether employees will be able to take these days off as bank holidays will depend on the drafting of their employment contracts and employers may want to have any holiday clauses redrafted to retain discretion over whether its workforce can take time off where the bank holiday is unprecedented or “unusual”.

B- Addressing recommendations from the Women and Equalities Committee on changes to workplace practices to support employees with menopausal symptoms – it is important for employers to ensure their policies and workplace culture remain up to date and address ways to support women going through the menopause. Our previous article sets out a few ways employers can do this.

C- Allow for time off to reflect statutory time off/pay entitlement for parents of babies who require neonatal care – the policy should be clear on a reporting process and have safeguards and procedures in place to support any affected employees’ mental health.

D- Address the changes to the law in respect of ‘fit notes’ – which can now be certified by doctors, nurses, occupational therapists, pharmacists and physiotherapists. 

Employers should ensure that HR policies and handbooks are harmonised and, in addition to the above changes, any related policies (which may also be impacted by the above) are updated for clarity and consistency. 

If you have any queries as the contents of the article, if you need advice on drafting your policies or are an employee concerned about these changes, please contact our experienced employment team for further advice.

Please note, the law or proposed bills, regulations or legislation referred to in this article is true as at the time of writing. The law as in force at the time of reading should always be consulted.