'Sunset clause' has gone but threat to key employment rights remains

I should start this article by making it clear that the Employment Lawyers Association (ELA), of which I am chair, is an apolitical association and it is of course a matter for government what policies it pursues. However, we do consider it within our role to point out potential consequences and ramifications of the Retained EU Law (Revocation and Reformation) Bill (REUL). Accordingly, the comments below are not about the rights or wrongs of Brexit - that is not something the ELA is permitted to comment on. Instead our sole focus is on the implications of the proposed changes by this bill to UK law.

It is fair to say that REUL, or the 'Brexit Freedom Bill' as it is more commonly known, has courted a great deal of controversy and criticism from across all sides of the political and industrial divides. Its original intention was, in one fell swoop, to extricate all retained EU law from the statute book on 31 December 2023 unless it was expressly retained. The so-called ‘sunset provision’.

With the clock ticking and at least 4,000 pieces of legislation to be reviewed, and decisions to be made, on what would be kept, modified or revoked, the ELA, along with many others, raised grave concerns to the government about the legal uncertainty this was causing employers, employees and their advisers. We simply did not know what law would be effective as at 1 January 2024.

After much criticism of REUL in the House of Lords, the government decided to remove the much maligned ‘sunset’ clause. They have to replace it with a schedule of approximately 600 items of retained EU law it intends to revoke on 31 December 2023. Any REUL that is not on that list will remain valid unless and until any further action is taken to revoke, amend, restate or replace it. ELA welcomes this decision.

However, the government remains committed to the removal of three EU law principles (supremacy, direct effect and general principles) from UK law by 31 December 2023. This would mean that any retained EU law that remains on the statute book after the 31 December 2023 could not be interpreted by applying these principles.

Consequently, lawyers will no longer be able to reasonably and accurately predict the effect of workers’ rights or employers’ obligations. Workers will be uncertain as to the scope, meaning, application or entitlement to their working rights. 

Some examples of where this will have a practical impact:

• As a result of applying EU law principles, courts have enabled tens of thousands of women in supermarkets to compare themselves to better paid men who work in the same business in their equal pay claims. If this right is taken away, many women who suffer sex-based unequal pay would no longer be able to bring their claims. It would remove incentives for employers to eradicate such disparities. Equal pay rights in the Equality Act 2010 do not go as far and have, since 1976, been supplemented by EU law.

• Tens of millions of workers who benefit from holiday pay rights. The application of direct effect, supremacy and general principles have meant that previous court decisions have been overruled so that workers are entitled to the same pay that they earn at work when on holiday, or that workers who are misled as to their working status don’t lose holiday pay when their employer refuses to pay them their entitlement.

In light of the above, the ELA strongly counsels that the government carries out a comprehensive audit as to the effect of abolishing:

• The principles of direct effect, supremacy and EU general principles on the meaning;
  
  of all retained EU regulations; and
  
  on rights under acts of parliament.

The government should then review the outcome of the audit and ensure that the powers under the bill are used to preserve the three principles, so it maintains certainty in the meaning of the law and avoids the vacuum of uncertainty during any transition from old to new law.

Legal certainty is a fundamental constituent of any efficient legal system. Like here, when the settled and predictable meaning of a considerable body of employment law is wiped away then there is uncertainty and unpredictability. Legal uncertainty can undermine any plan for growth as neither employers nor employees will have clarity as to the meaning of large parts of employment law that affect investment and the cost of labour.

Paul McFarlane is chair of the Employment Lawyers Association