What might the Brexit Freedoms Bill mean for employment law?
23 September 2022
No more right to paid holiday. Goodbye TUPE. Farewell limits on working hours. This article takes a first look at the government’s Brexit Freedoms Bill and the potentially major implications for UK employment law.
After Brexit, the UK’s transition out of the EU was eased by the retention of a “snap shot” of applicable EU in force in the UK on 31 December 2020, known as retained EU law. The new Retained EU law (Revocation and Reform) Bill aims to dramatically speed up the process of removing and replacing these retained EU laws. The government's press release says that this will enable the UK government to create regulations tailor-made to the UK’s own needs, doing away with outdated and burdensome EU laws.
The UK is already free to remove retained EU law, but only by using certain tightly defined processes. Seemingly, this is seen as too slow. The Bill allows for the scrapping or replacing of EU law by means of regulations. This is a much faster process and involves less parliamentary scrutiny. Crucially, the Bill includes a “sunset clause” meaning that, at the end of 2023, what’s left of some retained EU law will simply vanish and disappear into the night (although this can be extended to June 2026 if the government needs to extend the deadline in relation to specific laws).
The reform agenda: re-legislating for new UK employment laws
The Bill includes provisions enabling certain retained EU law to be saved, replaced or scrapped by new regulations. The basic options are:
- Restatement. This would seem to turn the law into a purely UK law, stripped of the interpretative effect of EU law. When restating law, there is a limited power to change the wording to resolve ambiguity or doubts. It remains to be seen how much flexibility this affords.
- Replacement. This allows for complete replacement with a new UK version (which would not need to be interpreted in line with EU law). Crucially, the Bill says that replacements cannot “increase the regulatory burden”.
- Revocation. This means the law is scrapped without a UK equivalent being put in its place.
These new powers do not apply to all EU retained law. They do apply, however, to:
- Secondary legislation (i.e. regulations) implementing EU law (such as the Working Time regulations), plus
- EU-derived employment laws which are contained in Acts but put there by regulations (such as some of the collective redundancy consultation requirements in section 188 Trade Union & Labour Relations (Consolidation) Act 1992).
So what could happen? Some rights could be deliberately saved, but stripped of the impact of certain ECJ caselaw. New UK versions of some rights (such as working time rights) could be introduced, or they could be scrapped altogether. If a new UK working time law is introduced, however, it can’t increase the regulatory burden – so, for example, it seems it would not be possible to take the opportunity to introduce a right to disconnect.
What’s in scope of the sunset clause?
Although large amounts of UK employment law is now on the reform agenda, not all of it is subject to the prospect of evaporating altogether under the sunset clause.
By the end of 2023, EU-derived secondary legislation (i.e. laws which are not contained in an Act) will evaporate under the sunset clause unless deliberately saved or replaced. This looks set to impact a vast range of employment-related regulation, for example:
- The Working Time Regulations
- The Agency Workers Regulations
- The Part-time Workers Regulations
- The Fixed term Employees Regulations
- TUPE (but only insofar as it implements EU law. In fact, TUPE deliberately goes further than EU law in some respects)
- The Information & Consultation of Employees Regulations
- Various Health & Safety regulations
- The Maternity & Parental Leave Regulations (in respect of parental leave and potentially certain aspects of the maternity regime but only insofar as the regulations operate to implement EU law).
Employment laws contained in Acts, however, are not subject to the sunset clause.
What’s not on the reform agenda?
Some employment laws are contained in primary legislation (Acts). If they were put there by regulations then they are potentially on the reform agenda (see above) although they won’t vanish in the sunset clause. If the text comes from an Act, however, and not regulations, then they are not on the reform agenda at all. This applies to most of the Equality Act 2010. Some of these laws may still be retained EU law, but they will be automatically assimilated. The supremacy of EU law will, however, be switched off (see below).
The key questions about legislative reform
The Bill raises many major questions, including:
- Will there be enough time to reform laws properly? There is certainly a risk that rushed law will not be good law, but will the government be content to see regulations vanish under the sunset clause or will it be willing to rely on the extension power to allow for longer debate?
- If we are creating tailor-made UK laws, will we just use the existing regulations as the starting point (because that’s quicker than a blank sheet of paper)? For example, if we are going to have laws about rest breaks, what other periods of time should we start with, if not those in the Working Time Regulations?
- Will there be proper consultation about, and oversight of, any new laws?
- If laws are scrapped, reformed or allowed to evaporate under the sunset clause, what happens when rights conferred by those laws have been translated into contractual provisions (e.g. holiday rights in employment contracts, or exit provisions in TUPE contracts)?
- Under the UK-EU trade deal, the UK faces the prospect of tariffs if it reduces employment rights if that confers a competitive advantage. To what extent will this influence the reforms?
Turning off supremacy, ECJ caselaw and general principles of EU law
The principle of “supremacy” of EU law was described by Lord Frost in a statement to parliament as a concept which forces all other UK legislation to be interpreted so as to give way to EU law where there is a conflict. The Bill explicitly removes this from the end of 2023. As this Twitter thread by Caspar Glynn QC points out, the removal of EU supremacy means the repeal of some directly effective EU rights including the right to equal pay under the EU Treaty (although those rights could potentially be codified as part of the restatement process described above). The principle that domestic legislation should be interpreted in line with EU law will also be scrapped.
In terms of judicial interpretation, pre-Brexit ECJ caselaw can currently be overruled by the Court of Appeal or Supreme Court. The Bill tries to encourage those courts to be more enthusiastic about exercising those powers by setting out a new test, which includes asking if circumstances have changed. To speed up the process of departing from ECJ caselaw, the Bill allows lower courts (including employment tribunals) to ask appeal courts if they are still bound by certain retained caselaw. This is only when points of law of “general public importance” are at stake, but it is possible to imagine many such questions arising in the employment field. This provision alone has the potential to cause chaos in employment tribunal litigation, although it is worth observing that the relevance of ECJ caselaw may diminish as employment laws are reformed under the processes described above.
Currently the UK courts are still required to interpret retained EU law in accordance with retained general principles of EU law, such as proportionality, the protection of legitimate expectations and (according to the Bill’s explanatory notes) the protection of fundamental rights and the equality principle. The Bill abolishes these principles from the end of 2023, although this could be largely symbolic because UK courts already go about interpreting domestic legislation in a similar way in the employment context.
We can expect fierce debate and many proposed amendments before the Bill is eventually passed into law. But the end of 2023 is not so far away, and presumably government departments will be under pressure to get going with reviewing any retained EU laws that fall within their area of responsibility, to avoid running out of time and being left exposed to the operation of the sunset provision.
Given the complexity of employment law, it seems reasonably likely that the extension power may be needed to keep certain regulations in place while we debate an appropriate replacement. On the other hand, there is a general election coming in 2024, and a new government might have different ideas for reform while the current government may be keen to push many reforms through before the election.
It certainly looks like we are in for a very significant, and very speedy,shake-up of employment rights. When it came to implementing EU directives, employers would generally have at least two years to get ready. At this rate, it looks like they may not have the same amount of time to prepare for their removal.
Reshaping your workforce
The lasting effects of the pandemic, the impact of the war in Ukraine, the national cost of living crisis and the war for talent are currently major factors driving the need for organisations to change and adapt.
The UK left the EU at 11pm (UK time) on 31 January 2020, and the transition period came to an end on 31 December 2020. The Trade and Cooperation Agreement reached on Christmas Eve 2020 sets out the shape of the ongoing future relationship between the UK and the EU and provides some degree of certainty for UK businesses.