Brexit Changes: Implications for Employers

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Following the UK’s withdrawal from the EU, the government has announced a number of changes to employment law in a policy paper titled “Smarter regulation to grow the economy”. The policy’s main agenda appears to be centred around cutting costs, reducing burdens for businesses and boosting the economy.

The changes that have been announced can be summarised as follows:

Working Time Regulations

  • Holiday entitlement – Currently, employees have two types of holiday entitlement, 4 weeks leave under EU law and an additional 1.6 weeks leave from UK legislation. The government plans to merge both types of leave to create one single entitlement. This may mean that employers will be able to revert to the old method (excluding commission, overtime etc) to calculate holiday pay, although the government has not expressly commented on this.
  • Holiday pay – Currently, there is a prohibition under EU law on rolled-up holiday pay (i.e. paying workers an additional sum each month representing holiday pay usually 12.07% of their salary) however the government plans to reverse this in a bid to reduce the administrative burden and complexity of calculating holiday pay on employers. If implemented, what this would mean in practical terms is that workers will receive their holiday pay with every payslip which is good news for casual and part year workers.
  • Record-keeping – Currently, under EU law there is a requirement for employers to keep individual working time records for their employees to demonstrate that they are complying with the rules on maximum working hours for employees who have not signed 48-hour opt out agreements. The government plans to remove this requirement which may not have a significant implication as the majority of employers do not seem to keep such records as there is has never been strict enforcement of this requirement. It does mean however that employers will no longer be in statutory breach of the rules.


Currently only employers with less than 10 employees can inform and consult with their employees directly (rather than with nominated employee representatives) in a TUPE situation (business transfer or service provision change).The government plans to consult on extending this to businesses with fewer than 50 employees and transfers affecting less than 10 employees. Although intended to remove an administrative burden, it can only really have an impact if there is a transfer of part of a business and so the effect is likely to be very minimal.

Non-Compete Clauses

The government plans to restrict the duration of non-compete clauses in employments contracts to a maximum of 3 months. Whilst this measure is not strictly related to Brexit, it is built on the same premise of growing the economy and competitiveness in the market in order to make it easier for employees to move to a competitor. Until the government implements this legislation, this measure may create some uncertainty for employers however this measure requires primary legislation to be enacted and therefore likely to take a significant time to come into force. It won’t impact non solicitation clauses and therefore the longer protection on business relationships is not lost.

If you have any questions about any of the changes discussed, please contact our Employment team for support.

(June 2023)