What was the effect of the Retained EU Law (Revocation and Reform) Act 2023 for employers?

The Retained EU Law (Revocation and Reform) Act 2023 (the Act) received Royal Assent in June 2023. The Act, which comes into effect at the end of 2023, was originally billed as a “bonfire” of retained EU law. Though the final version of the Act repeals a much narrower scope of retained EU law than initially proposed, the Act could still have significant effects for the future of employment law.

What does the Act do?

In its original form, the Act would have repealed all EU-derived legislation which was not explicitly preserved. This would have affected many significant pieces of employment legislation including:

• The Working Time Regulations 1998
• The Transfer of Undertakings (Protection of Employment) Regulations 2006;
• The Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000; and
• The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.

This previous version of the Act was criticised for introducing uncertainty and leaving large gaps in the law. In response, the Government announced a change of approach. Rather than abolish all EU-derived law which is not expressly saved, the current Act will repeal only the legislation expressly listed in Schedule 1 of the Act. Retained EU law not included in Schedule 1 will not be repealed and will instead be converted into “assimilated EU law.” Schedule 1 contains approximately 600 pieces of legislation, none of which is likely to be of significant concern for employers. However, the Act also makes it easier for Parliament and the Courts to depart from EU-derived law in the future, meaning the effects of the Act could be quite significant.

End of supremacy of EU law

When the Act comes into effect at the end of 2023, EU law will no longer take priority over domestic law. Retained EU law (or “assimilated” EU law, as it will be known) will be interpreted in line with domestic law as far as possible, and where the two conflict domestic law will take precedence.

General principles of EU law, such as proportionality, legal certainty and respect for fundamental rights will also be abolished at the end of 2023.

Abolition of directly effective rights

Currently, UK citizens can rely on and enforce directly effective EU rights in UK Courts. This will no longer be possible when the Act comes into effect, and this could have an impact on future employment claims. For example, Article 157 of the Treaty on the Functioning of the EU contains the principle that men and women should receive equal pay for equal work. Employees wanting to make an equal pay claim will still be able to rely on the equal pay provisions contained in the Equality Act 2010, but will lose the wider protections afforded by Article 157.

Case Law

The Act makes it easier for UK Courts to depart from retained EU case law. The UK Supreme Court and the Court of Appeal will be empowered to depart from domestic case law which has been influenced by retained EU case law where the Courts “considers it right to do so”. When deciding whether to depart from retained EU case law, the Supreme Court and Court of Appeal will also be required to consider “the extent to which the retained EU case law restricts the proper development of domestic law.” Lower courts and tribunals will still be bound by retained EU case law. However, the Act allows lower courts to refer a point of law to the Court of Appeal or Supreme Court where it considers the point to be of “general public importance.”

The Act creates a wide scope of case law which may now be open to reconsideration. Employers may therefore see an increase in cases re-litigating employment questions that were previously thought settled. As we do not yet know how willing the Courts will be to depart from previous case law, this creates some uncertainty.

Ministerial powers

The Act grants Ministers wide powers regarding retained (and assimilated) EU law including the power to restate, revoke, or replace any secondary EU law. Restatements may be made by Ministers to resolve ambiguities and improve clarity in the law. A Minister may revoke retained EU law and replace it with an alternative provision or not replace it at all. These powers have received some criticism as they may allow a Minister to make consequential changes to the law with little Parliamentary scrutiny or debate. These powers do not expire until 23 June 2026.

As we do not know how Ministers will use their new powers to amend retained EU law, nor do we know how Courts will use their ability to depart from previous case law, it is difficult to say what the true effects of the Retained EU Law (Revocation and Reform) Act 2023 will be on employment law. We will keep you informed of developments as they occur. If you have any questions about how your business could be affected by the Act or would like to discuss any other employment queries, please contact our Employment Team at employment@warnergoodman.co.uk or call us on 023 8071 7717.