Government introduces policy paper ‘Smarter regulation to grow the economy’

Posted on May 25th, 2023

On 10 May 2023, the Department for Business and Trade released its policy paper on regulatory reform in the post-Brexit era. Regulation can sometimes be viewed as a bar to business, but entirely doing away with regulations is not the government’s aim. Regulatory reform is seen as an opportunity to benefit business as well as to ensure markets ‘function properly’ for the benefit of all consumers and citizens of the country.

The policy paper refers to three sections including ‘Delivering an improved better regulation framework’, ‘Working with regulators to drive growth and improve outcomes’ and ‘Reforming regulations to reduce burdens’.

While this process will be ongoing, the initial proposal areas for regulatory reform within employment are the focus of this brief article.

Reducing the Working Time Regulations reporting burdens

The proposals as referred to in the paper are as follows:

  • Removing retained EU case law that impose time-consuming and disproportionate requirements on business for working hour records to be kept for almost all members of the workforce. This will cut red tape for businesses and help them save £1 billion per year while protecting the rights of workers.
  • Reducing the administrative burden and complexity of calculating holiday pay. They propose introducing rolled-up holiday pay, so that workers can receive their holiday pay with every payslip, and merging the current two separate leave entitlements into one pot of statutory annual leave, while maintaining the same amount of statutory leave entitlement overall.

Simplifying the employment regulations that apply when a business transfers to a new owner

The proposals here are in relation to the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations which protect employees when they transfer to a new organisation. Where there are fewer than 50 people and for transfers affecting less than 10 employees, the proposals seek to make it possible for businesses to consult directly with employees instead of having to elect employee representatives.

This is with a view to reducing administrative burden on business and improving direct engagement with employees.

Reform non-compete clauses to boost competition and innovation

Here the government proposes to legislate to limit the length of time of non-compete clauses in employment contracts to a maximum of three months. This is to give employees the opportunity of joining competitors sooner. The rationale behind this is that non-compete clauses are described as often being too long and stifle employees from going to better paying roles. The paper also suggests that the current system limits the ability of businesses to properly compete and innovate.

Full paper

While this can perhaps be described as only the start of the process of regulatory reform of employment laws it is also fairly nuanced in terms of its scope and ambit.

The full paper ‘Smarter regulation to grow the economy’ can be found here.

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