To reform or not to reform, that is the question

Suzanne Gallagher, UK Product Manager at Employment Hero explores the impact the passing of The Retained EU Law (Revocation and Reform) Bill could have on accountancy and payroll. 

The post-Brexit reform Bill is one of the most significant developments in recent employment law history, and if it is passed into law, it could be the one that causes the most confusion and disruption.

The Bill aims to speed up the removal of certain retained EU laws by giving Government ministers the ability to scrap or replace them by 31 December 2023, unless an extension is applied for. There is little doubt that most businesses will want to keep many EU-derived protections, as these laws are established and well understood.

The Bill affects a huge amount of employment law and will greatly impact accountancy and payroll practices.

Although it is likely that most of the EU-derived laws will be retained in some form, there are laws that are at risk, such as part-time and fixed-term worker regulations, maternity and parental leave, rights to written T&C’s, and Transfer of Undertakings Protection of Employment, (TUPE).

If we take the Working Time regulation as an example, these are just some of the areas within that, that are affected:

• The working week being capped at 48 hours
• The entitlement of a 20-minute break if you work for longer than six hours, an 11-hour rest in each 24-hour period, and one day off a week
• Night workers hours not exceeding an average of eight hours a day
• Paid holiday entitlement of 5.6 weeks

Whilst some exceptions can be made, these regulations cover most employees and workers. We will see a swathe of consultations and proposals for creating new UK laws to replace, and potentially scale back, EU-derived versions. The Working Time regulation is just one small area of circa 4,000 laws and regulations derived from the EU. If changes are made, this will create an unprecedented level of work for employers, accountancy and payroll firms, HR practices, lawyers and beyond.

When we look at the current Department for Business Energy and Industrial Strategy’s (BEIS) consultation to bring part-year workers’ holiday pay and entitlements in line with those of full-year workers, we are still very much defining what some of these existing rules mean. This is leading to a lot of debate, and this is only one part of regulations.

It could be argued that the government is not focussed enough on the Bill and the impact it will have on businesses in 2024 and beyond, especially considering Kwasi Kwarteng’s mini budget was the day after the bill was announced, and the Government hasn’t been seen to be pushing the agenda on the possible changes and what they mean.

A recent debate on 1 February in the House of Lords perhaps highlights further the uncertainty thus far. A direct question was raised around TUPE, which provides protection to employees when a business changes ownership, and if this legislation would be retained.  The response was that it would be reviewed to see if it was appropriate for the UK economy, and if necessary, reviewed. With the sheer number of retained EU law items within the Retained EU Law and the timeframe left, how will it be possible to review them all?

No doubt accountants reviewing the EU Retained Law Dashboard will look in despair, with (at the time of writing) 337 items under the Department of Business, Energy and Industrial Strategy, 228 under HM Revenue and Customs, 212 under the Department for Work and Pensions, and the list goes on.

We need urgent clarity from the Government on which, if any, regulations will be retained or replaced with UK equivalents so accountants can help business clients to plan effectively. Having just gone through the second reading at the House of Lords, we can expect further examination and hopefully more detail of what may come sooner rather than later.

By Suzanne Gallagher, UK Product Manager at Employment Hero

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