Yesterday, 10 May 2023, we saw a raft of changes be announced by the Government. The consequences of these changes could be quite significant for employers and employees.
Non-compete Clauses Limited
The Government has announced an intention to introduce new legislation to make changes to post-termination restrictive covenants. There is no indication of when this change will be effective, except that it will be “when parliamentary time allows”; so it could be quite some time before it is brought in. However, it could change what employees may be expecting in any employment contracts, so it’s something to bear in mind from a commercial perspective. If we can be of any assistance in this, please just get in touch.
The changes proposed will mean that employers can still restrict employees during garden leave and notice, but that there may be changes to what happens post-termination. Employees cannot be indefinitely restricted in any event, so the presumed intention of the new law would be to clarify what restrictions are suitable.
Without going into excessive detail, there are generally four types of restrictions:
- Non-compete
This generally means former employees cannot be engaged, concerned or interested in the carrying on of any business which competes with their former employer.
- Non-solicitation
This would usually outline that former employees cannot solicit or entice any clients or customers to leave their ex-employer. Sometimes non-solicitation also extends to former employees and suppliers too.
- Non-dealing
This limits former employees from providing any services to their former employer’s customers or clients.
- Non-interference
These are slightly broader, and usually outline that former employees cannot interfere with the continuance of business.
The proposed changes will mean that non-competes are limited to three months. It’s clear from the announcements that the reasonableness of “non-solicitation” clauses continue to be assessed on the principle of “no more than is reasonably necessary to protect the employer’s legitimate business interests”. However, the Government has been silent on other forms of restrictions. It’s also not believed that the changes intend to make any amends to usual confidentiality obligations after the end of employment.
It remains to be seen exactly what the legislation will look like in the end, as it’s likely to require primary legislation, so may require input from committees on what is appropriate. Therefore, the announced changes may not end up being what is implemented down the line.
Continuing Consequences of Brexit
One key change to the Government’s previous proposals was that the Government is abandoning the “sunset clause” in the Retained EU Law (Revocation and Reform) Bill.
What did the sunset clause mean? It meant that EU law would be automatically revoked at the end of 2023, unless a statutory instrument is passed to preserve it under UK law.
That has now been reversed. This means EU law will remain binding unless it is expressly repealed.
What does that mean? Well, in short, it reduces the risk that employees lose any important protections because the Government overlooks preserving it. Instead, it means that the status quo remains as it is unless the Government expressly chooses to repeal it. If they do intend to repeal anything, and it will have consequences from an employment law perspective, we will let you know.
There are a few other intended changes that the Government has announced as a result of Brexit, which will affect employers and employees. However, something to bear in mind is that there has been no timetable announced regarding these changes, so we can’t know for sure whether we will see them in two months, or two years.
- “Normal” holiday leave (4 weeks guaranteed under EU Law) to be merged with “additional” holiday leave (1.6 weeks under UK law), to create one entitlement (5.6 weeks). This would have an impact where calculating someone’s holiday pay to consider commission or overtime. The current position is that commission or overtime should be taken into account when calculating pay for “normal” leave but does not have to considered in calculating pay for “additional” leave. The intended changes would mean that any calculation can consistently exclude commission, overtime, etc.
- Legally permitting “rolled up” holiday pay. Usually this is most common in hospitality, and is the practice of paying an employee extra for holiday pay, rather than giving them scope to take that leave. The intended changes would mean this is now lawful and may change what pay employees in certain sector can/should expect.
- Removing the requirement under the Working Time Regulations to keep records of working hours. In practicality though no one was really doing this, so it’s effectively removing a requirement which wasn’t hugely onerous in any event.
- Intended changes to TUPE mean that there will not be a requirement to consult with appointed representatives if there are fewer than 10 transferring employees. If you think any TUPE changes may impact you or any future changes to your business, please get in touch.
If you want to discuss any of the above further, please do not hesitate to get in touch with us.
Please note this information is shared for reference purposes only and is only accurate at which the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific Legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any actions. Please contact us if you have any questions on enquiries@thrivelaw.co.uk.
