20 Jun Incoming changes to UK Employment Law

The Department of Business & Trade has announced new significant changes to UK employment law:

Limiting non-compete clauses to 3 months

            The clause is in place to protect employers as employees are not able to use the information learned during the time of employment to start a business or compete with the employer. Limiting non-compete clauses to 3 months has a significant impact on employers and employees. Employers will have to bear a greater burden of risk. Workers benefit as they are able to more freely move to a competitor or start a competing business.

Removing reporting requirements from Working Time Regulations

            This change will remove the working time record for most members of staff. It is significant for employers as the reporting requirements were time-consuming. It is estimated to help businesses save up to £1bn a year.

Allowing rolled-up holiday pay

            Rolled-up holiday pay is a system where an additional amount on their payslip to cover their holiday pay as opposed to receiving it when they take annual leave. Rolled-up holiday pay is currently unlawful in the UK but that is due to change. Workers will be able to choose which method of pay they prefer. This is a welcome change for both employers and workers.

Merging holiday entitlements: 4 weeks from EU law and 1.6 weeks from UK law

            These changes do not affect the amount of statutory leave entitlement in the UK. These changes are to make calculating holiday pay easier for employers. Previously, there were different rate requirements for each entitlement. After these changes, all holiday pay will be under the same rate. This is beneficial as it simplifies the calculation of holiday pay.

Removing the requirement to consult with employee representatives in TUPE transfers for businesses with fewer than 50 employees with transfers affecting fewer than 10 employees

            Currently, businesses must elect an employee representative for informing and the consulting process during a transfer of ownership. The change will allow businesses with fewer than 50 employees with transfers affecting fewer than 10 employees to forgo this process of electing a representative. This is an improvement for the economics of SMEs but does weaken the rights of employees within small businesses.

Implications

            Many of these changes simplify processes for employers and workers. They provide benefits for both parties. While these changes are not yet implemented, it is imperative for employers to be proactive with any changes as it can affect current processes and contracts.