The Retained EU Law (Revocation and Reform) Bill Announced

If passed, the Retained EU Law (Revocation and Reform) Bill is set to significantly transform worker regulations in the UK.

Workers Rights

The New Brexit Freedoms Bill Unveiled

On 22 September 2022 the UK Government’s much anticipated Retained EU Law (Revocation and Reform) Bill received its first reading in the House of Commons,

The intended purpose of the Bill is to repeal, amend or replace thousands of EU laws and regulations that were initially retained when the UK left the EU in January last year and will provide the UK Government with the means to update previously retained EU legislation via Parliament.

Included in the Bill is a “sunset” provision that could potentially see all EU-derived subordinate legislation and retained direct EU legislation implementing EU law (regulations) scrapped entirely on 31 December 2023 unless otherwise preserved.

Special features of EU law will be removed from retained EU law that remains in force after that date (assimilated law), ending the principle of the supremacy of EU law, general principles of EU law and directly effective EU rights on 31 December 2023. EU interpretive features will no longer apply to assimilated law. (The sunset date can be extended until 2026 for specified pieces of legislation.)

What Employment Laws Could be Affected?

Employment laws currently contained within Acts are not captured by the sunset provisions, but a wide range of employment related regulations derived from EU law could be affected, including:

  • The Working Time Regulations
  • The Agency Workers Regulations
  • The Part-time Workers Regulations
  • The Fixed term Employees Regulations
  • TUPE (but only insofar as it implements EU law)
  • The Information & Consultation of Employees Regulations
  • Various Health & Safety regulations
  • The Maternity & Parental Leave Regulations

More Uncertainty for UK Businesses

The first reading of the Retained EU Law (Revocation and Reform) Bill in the House of Commons on 22 September 2022 was only the first stage of a multi-stage process and there will undoubtedly be intense scrutiny and debate in Parliament before the Bill is passed into law but in the meantime, we face a lengthy period of uncertainty as the Government picks its way through an extensive and complex range of EU laws to determine which laws it will retain, replace and revoke.

We will continue to closely monitor the situation and track this comprehensive and transformative legislation to ensure we keep ahead of the regulatory changes that are undoubtedly coming.

Employee entitled to full commission that had been deferred during furlough (ET)

In a commission arrangement where an employer has any form of discretion, an employee has the right for that discretion to be exercised rationally and in good faith.

Mr Sharma was employed as a Business Development Manager by Lily Communications Ltd. During his recruitment in 2019, the employer’s commission scheme was discussed. Mr Sharma was told that he would earn 15% commission on all profit. He accepted the role on this basis. From 19 March 2020 to 12 August 2020 (when his employment terminated), Mr Sharma was furloughed as a result of the COVID-19 pandemic. In response to the pandemic, his employer decided that commission for furloughed employees would be deferred and they would not receive any commission payments while on furlough (but might receive payments afterwards). 

Following the termination of his employment, Mr Sharma brought claims for breach of contract and unauthorised deduction from wages in respect of unpaid commission payments. The employment tribunal found that Mr Sharma was not contractually entitled to be paid commission. However, when his employer exercised its discretion to do so, it was contractually obliged to act rationally and in good faith. The tribunal also found that there was no requirement for Mr Sharma to meet targets to be paid commission. Consequently, to the extent that his employer had withheld commission for months in which targets had been met, this was not rational. For months in which targets had not been met, withholding of commission was irrational or not in good faith given the lack of requirement to meet targets.

By contrast, the tribunal found that the decision to defer commission payments for furloughed employees was rational and in good faith, with the uncertainty arising from the pandemic perhaps being a “paradigm example” of a situation in which an employer would want to exercise its discretion regarding commission payments differently. There was no suggestion by Mr Sharma that his employer was prevented from exercising its discretion in this way. However, when his employer later chose to exercise its discretion to pay some of his commission on 31 August 2020, it was obliged to act rationally and in good faith. In the absence of any rationale or justification for not paying Mr Sharma his full commission “entitlement” at that time, it had acted irrationally.

Case: Sharma v Lily Communications Ltd ET/1900437/21 (25 March 2021) (Employment Judge Davies).