The Department for Business and Trade published the policy paper “Smarter Regulations to Grow the Economy” on 10 May announcing a number of Employment Law measures intended to grow the economy and cut costs for businesses.
The biggest change comes in the form of non-compete clauses. The government will limit the length of these to three months according to the policy paper.
A non-compete clause is a type of restrictive covenant that an employer may add to an employment contract where the employee agrees to not enter into competition with an employer after the employment period has ended.
Currently, non-compete clauses are governed by case law that provides that post termination restrictions such as non-compete clauses will only be enforceable if they are no wider than is reasonably necessary to protect the employer’s legitimate business interest.
The hope of this time limitation is that it will provide more flexibility for employers to join competitors or start up a rival business and that the wider economy will benefit from better accessibility to these skills. However, a shift to an increased use of garden leave for employees could have a negative effect as garden leave clauses prevent employees working for any party.
Rolled-up holiday pay is currently prevented by EU case law, however the government is now looking at agreeing to allow it as part of its package of reforms. As well as this, holiday entitlements are to be merged. Currently, employees have two separate entitlements, a 4 week leave entitlement based on EU law and then an extra 1.6 week’s leave which is a UK entitlement. These will be merged into one “pot” while maintaining the same amount of overall entitlement.
Working Time Regulations
EU case law requiring employers to record working hours for nearly all of the workforce will be removed, saving an estimated £1 billion a year. It’s important that employers don’t take this to mean that no records will need to be kept as national minimum wage rules will still mean that record keeping is required in these cases.
The Government proposes to change the consultation requirements in order to simplify the transfer process. In particular, it proposes that all small businesses (those with fewer than 50 employees) – will be permitted to consult directly with employees if there are no existing employee representatives in place, dispensing with the requirement to have elections for employee representatives. Businesses of any size will be permitted to consult directly with employees (where no existing employee representatives are in place) where a transfer of only a small number of employees (less than ten) is proposed.
The government has said that the proposals in this paper are an initial package and will be the first in a series of reforms. It has emphasised that it wishes to retain the powers in the current version of the Retained EU Law Bill to continue to amend EU-derived laws meaning we are likely to see further proposals in the coming months.
If you would like to discuss anything further in this article, please contact the Employment Team on 01603 677077 or email firstname.lastname@example.org.