Abandonment of the Sunset Clause and proposals for change to EU retained law


On the 10th May 2023, the Business and Trade Secretary, Kemi Badenoch, announced the removal of the “sunset clause” from the Retained EU Law (Revocation and Reform) Bill (the “Bill”). The Government introduced the Bill in September 2022, as part of the UK’s legal journey following the Brexit Referendum in June 2016.

What was the sunset clause?

In the Bill, the sunset clause was designed to provide a clear end date for retained EU laws in the UK. ‘Retained EU law’ is a category of UK law, based on the EU and EU-derived law that applied to the UK at the end of the Brexit transition period. If put into effect, the sunset clause would have meant that all retained EU law would have automatically expired on 31st December 2023, unless expressly retained.

What happens now?

The abandonment of the sunset clause means that the retained EU law will remain in force in the UK unless it is expressly repealed. The Bill will now be amended to include a list of the retained EU laws that the Government intends to revoke on 31 December 2023.

In her written parliament statement, Ms Badenoch stated:

“This provides certainty for business by making it clear which regulations will be removed from our statue book, instead of highlighting only the (retained EU laws) that would be saved. We will retain the vitally important powers in the Bill that allow us to continue to amend EU laws, so more complex regulation can still be revoked or reformed after proper assessment and consultation”.

The Government has published a list of selected EU based statutory instruments it intends to repeal at the end of the year. There isn’t anything within this which stands out particularly from an employment perspective, as those that are employment related include lesser known regulations such as:

  • The Community Drivers’ Hours and Working Time (Road Tankers) (Temporary Exception) (Amendment) Regulations 2006; an
  • The Posted Workers (Enforcement of Employment Rights) Regulations 2016.

Government Consultation – Proposed Reforms

However, what is of more importance to note at this stage is the consultation that the Government launched on 12th May 2023 on potential reforms to the Working Time Regulations 1998 (“WTR”), and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). These proposals were originally announced in the Government’s policy paper, Smarter Regulation to Grow the Economy, which was published on 10 May. This also announced the proposal that non-compete clauses in employment contracts should be limited to three months.

The consultation is  seeking views on the following areas, to ensure that the applicable law is fit for purpose for UK employers and workers:

  • record keeping requirements under the WTR;
  • simplifying annual leave and holiday pay calculations in the WTR; and
  • consultation requirements under TUPE.

In brief, the Government is proposing the following changes:

  • In terms of the WTR – removing the requirement to record daily working hours, including overtime, worked by employees, merging the two separate amounts of holiday entitlement (4 weeks and 1.6 weeks) and creating a singular leave entitlement of 5.6 weeks, setting out a minimum rate of holiday pay and arrangements for carrying over leave in legislation, and introducing rolled up holiday pay as an additional option for calculating holiday pay.
  • In terms of TUPE – extending the flexibility for employers to consult directly with employees (currently available for micro businesses) to small businesses (if there are no existing employee representatives in place), and to all sizes of business where a transfer of a small number of employees is proposed.

The Government has also confirmed that it will preserve key employment law legislation, including:

  • Maternity and Parental Leave etc Regulations 1999
  • Paternity and Adoption Leave etc Regulations 2002
  • Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
  • Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
  • The Agency Workers Regulations 2010
  • Information and Consultation of Employees Regulations 2004
  • Transnational Information and Consultation of Employees Regulations 1999

Whilst this provides some certainty for employers in relation to certain pieces of key legislation, and suggests that others such as the WTR and TUPE (albeit with some changes) are also likely to remain, further changes may be announced further down the line. Employers and businesses will need to stay up-to-date with future announcements and we will be keeping an eye out for these.

The list of EU based statutory instruments the Government intends to repeal at the end of this year can be found by clicking here.

If you have any questions about this, or any other employment law matter, please contact a member of the Employment team.


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