Key employment law updates | October 2022

Crop person signing contract

Retained EU Law (Revocation and Reform) Bill

As reported in last month's bulletin, on 22 September 2022, the UK government published the Retained EU Law (Revocation and Reform) Bill ("the Bill"), which (if enacted) will give the Government wide ranging powers to revoke or reform retained EU law (known as "REUL"). REUL is EU law that was retained following the end of the Brexit transition period and cut and pasted into our domestic legal system to avoid major disruption.

Most notably, the areas in employment law which are likely to be impacted are as follows:

  • TUPE protections.
  • Working time and paid holiday guarantees.
  • Certain health and safety regulations.
  • Information and consultation rights.
  • Rights of part-time workers, agency workers, posted workers and fixed-term employees.

The Bill includes a sunset date of 31 December 2023. This means that most REUL will be automatically repealed unless a decision is made to maintain it before that date.

The fate of REUL will not become clear for a while as the Government needs to decide which REUL's will be preserved (i.e. turned into UK law), replaced (creating a new UK version of the EU law, without increasing regulatory burdens), and which will expire (and no longer be relevant/take affect). Although no further clarity can be given at this point, it may significantly impact employment law and, therefore, employers. We will keep you updated as more information comes to light.

The repeal of repeals – Jeremy Hunt's October financial statement

Following appointment of Jeremey Hunt as Chancellor on 14 October 2022, and his subsequent financial statement, the repeal to IR35 has been repealed. Therefore, IR35 rules will remain in place post April 2023, and you should be mindful of this when employing contractors and consultants. Please do feel free to contact us should you have any IR35 queries. As well as this, Jeremey Hunt has scrapped the following changes made by the "mini-budget":

  • 1p tax cut.
  • The energy cap.
  • Removal of 45%.
  • Corporation tax freeze.
  • Dividend tax cut.
  • VAT-free shopping.
  • Alcohol duty.

For more detail on the changes, please refer to our article here.

New policy to remove reporting requirements and other regulations in connection to workers' rights

The Government has announced that red tape will be cut for thousands of businesses in the future. Currently, regulatory exemptions are often granted for SME's which the EU defines as below 250 employees. However, in the wake of the UK's exit from the EU, this exemption has now been expanded to more businesses by raising the threshold to those with under 500 employees. This means that fewer businesses will need to comply with certain reporting requirements. By way of example, one current reporting requirement for businesses with 250+ employees is Gender Pay Gap reporting.

Although the Government has assured that the exemption will be applied in a proportionate way to ensure that workers' rights and other standards are protected, it is not clear how this will take effect in practice. It should be noted that removing the legal requirements for some businesses to file official reports does not need to mean that those businesses have to stop reporting - rather, it will be a decision for companies to take.

Guidelines for PAYE settlement agreements calculations

This month, HMRC published How Guidelines for Compliance help you with tax ("GFC") and GFC1 (2022): Guidelines for Compliance: help with PAYE Settlement Agreement calculations ("GFC 2022").

The GFC sets out HMRC's view on the more complicated, misunderstood and novel areas of the tax rules, in an aim to provide businesses with more transparency and clarity. It is an aid for businesses who want to work in a low tax-risk environment. The GFC highlights interpretations that may have a higher risk of non-compliance and looks to provide alternatives and paths to compliance.

The GFC 2022 provides more specific guidance to employers on PAYE Settlement Agreement ("PSA") calculations. This is not to be confused with settlement agreements which are issued to exiting employees for example – a PSA allows employers to make one annual payment to HMRC to cover all of the tax and National Insurance due on specific expenses and benefits for employees. GFC 2022  sets out how HMRC would like calculations for PSA's to be submitted, with the intention that this will help  reduce the risk of tax non-compliance and errors being made. If you have any specific questions on PSA's you can get in touch with one of our Employment specialists.

Minimum Wages Directive: Council formally adopts minimum wage directive at first reading

The Economic and Financial Affairs Council have formally adopted the Minimum Wage Directive (the "Directive") at its first reading by the European Parliament. The Directive creates procedures for the adequacy of statutory minimum wages, promotes collective bargaining on wage setting and enhances the effective access to minimum wage protection for those entitled to it under national laws. Member States now have two years to transpose the Directive into their national laws. Although the Directive does not set a statutory minimum wage level, it has given scope to Member States to update and review minimum wage every two years, based off a set criterion.

Although this does not affect the UK, it should be noted by UK businesses who may have EU subsidiaries that it will need to be mindful of changes to national minimum wages made by Member States.