Working Time Regulations, TUPE & Non-compete Clauses – Proposed legislative changes

On 10 May 2023, the Department for Business and Trade published a policy paper, “Smarter Regulation to Grow the Economy.” The paper contained details that propose amendments to several areas of UK Employment law that will impact on your business, if made into law.

This blog explores the potential impact that these changes may have on your business. It is important to note that, at present, these remain as proposals and are not embedded in law – you should keep doing everything as usual for now.

Working Time Regulations 1998

The proposals set out several amendments to the Working Time Regulations, reducing the administrative burden on employers by:

Removing record-keeping requirements:
Removing case law that imposes time-consuming requirements for businesses to maintain working hour records, you’ll no longer need to keep logs of hours worked by each employee.

Permitting rolled-up holiday pay:
The proposal re-introduces the practice of rolled-up holiday pay, so that workers can receive their holiday pay with every payslip. This is particularly relevant for seasonal, casual or temporary workers, who usually do not need to take holiday and therefore may receive a rolled-up payment instead.

Merging basic and additional statutory leave:
Merging the current two separate leave entitlements into one pot of statutory annual leave, while maintaining the same amount of statutory leave entitlement overall. The current system separates the 4 weeks and 1.6 weeks entitlement as they come from two systems; this will merge the two, providing a total statutory allowance of 5.6 weeks.

TUPE: Transfers of business ownership or services

The Transfer of Undertakings (Protection of Employment) (TUPE) Regulations protect employees when the business or organisation for which they work transfers to a new owner, it may also apply when a service transfers to a new provider. TUPE regulations provide important protections for employees and provide a legal framework for transfers of staff, the proposals seek to simplify this process for small and medium sized businesses up to 50 employees and for small TUPE transfers.
Currently, businesses cannot consult employees directly where they do not have employee representatives in place, instead, they must elect employee representatives. The proposal is to remove the requirement to consult with elected employee representations for:

1. Businesses with fewer than 50 people
2. Transfers affecting less than 10 employees

This change will allow businesses in these circumstances to consult directly with the affected employees.

Non-compete clauses

Non-compete clauses are included in employment contracts to restrict an individual’s ability to work for or establish a competing business after they have moved on from a job.

The proposals set out to limit the length of non-compete clauses to 3 months, providing employees with more flexibility to join a competitor or start up a rival business after they have left a position.

This won’t impact on your ability to use (paid) notice periods or gardening leave, or to use non-solicitation clauses; nor will they impact on confidentiality clauses, or restrictions on (former) public sector employees under the business appointment rules.

Next steps

As these are proposals only at this stage, there’s no need to make any immediate changes. However, you’ll need to keep to up to date with the proposals and any implementation dates. We’ll keep you updated, but in the meantime, if you want to ensure that you’re fully compliant, let us help you and contact us today.