What could the current government proposals for Non-compete clauses, TUPE and Working Time Regulations mean for employers?

Smarter Regulations to Grow the Economy policy paper

The publishers of the paper, the Department for Business and Trade said that it would:

• Legislate to limit non-compete clauses in employment contracts to a three-month duration.
• Consult on suggestions to enhance the working time regulations.
• Roll up holiday pay.
• Remove the requirement to elect employee representatives in TUPE consultations.

The government has also revealed plans to get rid of the sunset clause in its Retained EU Law (Revocation and Reform) Bill. This would have automatically removed every EU law at the end of 2023 if it hadn’t already been reviewed by the government.

What is the smarter regulation the government has proposed?

The first proposal is to change the length of non-compete clauses in employment contracts to three months. The government claims this will give employees more flexibility if they want to join a competitor after leaving a business.

Employers sometimes add non-compete clauses in an employment contract. They are a type of post-termination restriction (PTR) known as ‘restrictive covenants’.

HR professionals have warned employers that they still need to ensure the clauses are drafted effectively. This will help protect the business if an employee did leave.

The proposal could mean senior employees would be able to start employment with a business’s competitor much sooner, which could be detrimental. Employers should think about implementing stricter rules on personal devices and tighter controls over confidential information.

The second proposal is to remove retained EU case law that imposes requirements on businesses for almost all employees to keep working hour records.

The third proposed plan is to amend the TUPE regulations. The government say the consultation will look at removing the TUPE requirement for businesses with fewer than 50 people and transfers involving fewer than 10 employees.

The plan for transfers is to allow businesses to consult the affected employees directly. Currently, businesses can not do this and must do it through an elected employee representative.

The last two proposals the government have stated are to roll up holiday pay and merge current leave entitlements into one annual leave statutory pot. This would still keep the same amount of overall holiday entitlement.

HR employer advice and support with Employer’s Direct

The proposals stated by the government’s Smarter Regulations to Grow may cause uncertainty for employers, especially concerning the non-compete clause.

If you are a business concerned about employees you think are at risk of leaving your business, it’s best to put a contingency plan into place. That’s if your existing non-competes can only last 3 months or are left unenforceable by the new rules.

We provide free support if you’re an employer and need advice on these new HR and employment law proposals.

You can speak to one of our HR and employment law advisors free at 0800 144 4050 or fill in the form here to request a callback.