Government’s first deregulation announcement includes employment law changes

Friday 19th May 2023

Last week, the Government made the first in a series of deregulation announcements it expects to make this year, with the stated purpose of reducing the burden on business and growing the economy. Included in the announcement were several employment law measures relating to the WTR, TUPE and non-compete clauses. The Government is now consulting on the proposed changes to the WTR and TUPE.

Working Time Regulations

The consultation focuses on the following key changes to the WTR:

  • removing retained EU case law that requires businesses to keep working time records for almost all members of their workforce. The consultation focuses on the current systems employers may have in place and whether such records are important for the purposes of enforcing rights or defending potential claims under the WTR.

  • merging the 4-week annual leave entitlement mandated by EU law and the additional annual leave entitlement of 1.6 weeks provided under UK law into one 5.6 week entitlement to annual leave.
  • clearly defining the minimum rate of holiday pay and arrangements for carrying over leave. The Government is seeking input on how the minimum rate of holiday pay should be calculated.
  • calculating holiday accrual during the first year of employment.

  • reducing the administrative burden and complexity of calculating holiday pay by introducing the additional option of “rolled-up” holiday pay not just for those working irregular hours but for all workers. This would allow workers to receive an additional amount or enhancement with every payslip to cover their holiday pay. The proposed rate for rolled-up holiday pay is 12.07% of a worker’s pay which would be designated holiday pay on each payslip.


The Government is also consulting on removing the requirement to elect employee representatives for the purposes of TUPE consultation where businesses have fewer than 50 employees and for all businesses in circumstances where the transfer affects less than 10 employees, provided that there are no existing representatives in place. The stated aim is to allow businesses to consult directly with affected employees, simplifying the transfer process while protecting workers’ rights.

Non-Compete Clauses

The Government has also indicated that it intends to legislate about non-compete clauses. They say that although such covenants play an important role in protecting businesses, it considers that unnecessarily burdensome clauses have become the default, inhibiting workers and limiting the ability of businesses to innovate and compete.

The Government intends to limit the length of non-compete clauses to three months with the stated aim of promoting competition and productivity in the workplace, boosting the economy and providing more flexibility to employees. No timeline has been identified for this change, with the Government stating that legislation will be introduced when “Parliamentary time allows”. It therefore does not appear as if this change will happen soon. If it is brought in, they say that employers will still be able to use paid notice periods, garden leave provisions, non-solicitation clauses and confidentiality obligations to protect their businesses.

Further details

Further details of the plans can be found in the policy paper:

Smarter Regulation to Grow the Economy (

Details of the WTR and TUPE consultation can be found here:

Retained EU Employment Law consultation (

The consultation closes on 7 July 2023.

All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.