Kwasi Kwarteng © FT montage; AFP/Getty/Bloomberg

Kwasi Kwarteng, the UK business secretary, maintains that a post-Brexit review of UK employment law will not harm workers’ rights. The Labour opposition accuses ministers of tearing up promises, and says it will fight any attempt to “take a wrecking ball” to hard-won rights.

But the real issue, according to business groups and lawyers, is that the government is “tilting at windmills” by seeking relatively minor changes to the details of EU-derived laws, rather than tackling the much bigger, homegrown problems — in particular around enforcement — hobbling the UK’s labour market.

What exactly is under review?

Officials at the business department are examining the case for scrapping the 48-hour working week enshrined in the EU working time directive — hated by many Conservatives since its inception, when it was forced through in the teeth of opposition from then prime minister Margaret Thatcher.

A wholesale repeal of the WTD directive would be a big symbolic move that would set the government on a collision course with unions and potentially cause a clash with Brussels, since it would mark a clear divergence from European labour market standards.

Public declarations by ministers that they will not weaken workers' rights are — at face value — a red line which will make it harder to carry out wholesale reform of the 48-hour week. It could even constrain them from making more limited changes to EU-derived regulations, such as changing the rules on calculating holiday pay.

Instead they could be left with less controversial proposals such as scrapping a requirement for employers to log working hours daily.

What would scrapping the 48-hour week mean in practice?

Less than one might think.

The 48-hour week is a totemic issue for Tory MPs, but in practice, it is not seen as a constraint by employers, who can ask workers to opt out and agree to work longer hours — and have generally been able to do so where needed.

The worry would be that scrapping the 48-hour limit would put low-paid workers under pressure to work longer than they wanted. But Neil Carberry, chief executive of the Recruitment & Employment Confederation, the professional body for UK recruitment businesses, said there would be “little practical effect” — although some sectors, such as care, faced the risk of encouraging a long-hours culture to the detriment of safety.

Scrapping the limit “would be a big signal but I’m not sure it would have a big impact,” said Darren Newman, a consultant in employment law, adding that the regulations rarely led to litigation.

A government analysis of the WTD’s impact, published in 2014, found that the legislation had contributed to a decline in long-hours working — which is now more common among high-paid workers. But it was far from the only factor. UK working hours are shorter than the European average, even though they are largely set through individual employment contracts, rather than legislation or collective bargaining.

Line chart of Average weekly hours worked showing Average working hours have been in steady decline for the past 170 years

What else could change?

Some other measures under consideration would undoubtedly be controversial.

Holiday pay in particular has been the subject of law suits, supported by unions. Employers say the rules on calculating entitlements for employees working irregular hours, and for those paid partly through commission or overtime, are unclear — leaving them open to expensive retrospective claims if they make a mistake.

Changing the rules could leave some workers worse off — but Mr Newman argues that in practice, holiday pay is simply part of the overall wage settlement, so the main effect would be to limit employers’ potential liability, rather than to cut their wage bill.

Rachel Suff, a senior policy adviser at the CIPD body for HR professionals, said that while there was no pressure from employers to “roll back workers’ rights”, they would welcome some other changes — such as greater freedom to align employees’ terms and conditions after buying a business or taking over an outsourced contract.

But these are changes at the margins of UK employment law, not a wholesale rewrite of the rules governing the labour market.

“There is no clamour from business to overhaul employment regulations,” said Matthew Fell, UK chief policy director at the CBI — a view echoed by both the CPID and the REC.

What is wrong with the proposals?

The real problem with the proposals, observers say, is that officials appear to be devoting their energies to a largely symbolic exercise in scrapping EU-inspired red tape, while failing to follow through on existing plans to bolster the rights of UK workers.

The government has not yet published an employment bill promised in 2019 that was meant to support flexible working, protect new parents from redundancy, give low-paid workers and those in the gig economy greater security, and create a new, single enforcement body.

“One would want to see any consultation about ending EU regulations in the context of an overarching strategy about protecting British workers,” said Matthew Taylor, the government’s director of labour market enforcement, whose role is to set an overall strategy for the three bodies policing UK employment rules.

Mr Taylor previously led a review on strengthening the rights of insecure workers. The government accepted almost all his recommendations but four years on, most have yet to be implemented.

With enforcement bodies underfunded and huge backlogs of cases waiting to be heard by employment tribunals, many of the problems in the UK’s labour market stem from a failure to police existing rules. However, progress in establishing a single enforcement body has stalled and the government has not yet appointed a successor to Mr Taylor, whose term ends this month, saying recruitment is “ongoing”.

Meanwhile, employers say the main obstacles to improving workforce productivity are homegrown.

Mr Carberry said the government was “tilting at windmills” by targeting the working time regulations, with the row over the 48-hour week distracting from issues that would make a difference to employers — such as a reform of the much-reviled apprenticeship levy.

He added: “The government forgets its job is to steward the labour market, not just to regulate it.”

Get alerts on UK employment when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article