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Mini budget, big reforms

Helping HR staying on top of the extensive changes in employment law in the UK

Chancellor Kwasi Kwarteng’s ‘mini budget’ was announced today and is anything but ‘mini’ in terms of its potential impact on employment law.  He has proposed a number of important and extensive changes affecting all employers and workers.

Repeal of IR35 on 6 April 2023

The new off payroll rules (known as “IR35”) which came into force in April 2021 will be repealed on 6 April 2023.

This means that from 6 April 2023, the position will revert to the original pre-April 2021 position (for the private sector) i.e. workers who provide their services to an end client through an intermediary (such as their personal service company) will once again be responsible for determining their own employment status and paying tax and NICs, as appropriate.

This means end users will no longer have to produce status determination statements or engage individuals indirectly via other intermediaries such as employment businesses who become the ‘fee-payer’ responsible for PAYE.

The Chancellor has said that it will keep IR35 compliance under review. It is currently unclear what position HMRC will take when dealing with businesses who have inadvertently fallen foul of the off-payroll legislation in the period leading up to April 2023.

Repeal of European Law on 31 December 2023

Following Brexit, many aspects of European Law were retained by virtue of the European Union (Withdrawal) Act 2018.  This included UK legislation that was enacted to implement EU Directives.

However, The Retained EU Law (Revocation and Reform) Bill was placed before Parliament yesterday and provides that all retained EU law will be repealed automatically on 31 December 2023 unless domestic legislation is introduced to keep it.   This date may be extended to 31 December 2026 for specific legislation.

There are many forms of retained EU law in the UK, including legislation which is designed to protect employees’ rights on the transfer of a business or service, guarantees workers’ minimum holiday entitlements and rest periods, protects against detrimental treatment of fixed term and part time workers, and entitles agency workers to equivalent access to facilities and terms of employment.

This will result in new legislation and will give domestic courts greater discretion to depart from retained EU case law.

It’s unlikely we will see a repeal of all of these areas but we may well see adjustments being made to them when domestic legislation is enacted.

Chancellor Kwasi Kwarteng’s ‘mini budget’ was announced today and is anything but ‘mini’ in terms of its potential impact on employment law.

Industrial Action Reform

The Chancellor announced plans to require striking workers to provide a ‘minimum service level’ in critical sectors such as transport – a pledge made by the Conservative party back in 2019.

He further stated that the government would legislate to require unions to put pay offers to a member vote “to ensure strikes can only be called once negotiations have genuinely broken down.”

These changes will undoubtedly cause divided opinion and are announced amid a wave of recent industrial action affecting the transport sector.

We will keep you updated on these changes and if you have any questions in the meantime please do not hesitate to contact us.

About this article

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

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