The UK has had a difficult relationship with the European Union’s Working Time Directive. So has it used its post-Brexit powers to diverge from European employment law?

Since it was first adopted in 1993, the Working Time Directive (WTD) has thrown up challenges for European Union (EU) Member States. During its EU membership, the UK even attempted to have the WTD struck downby the Court of Justice pf the EU (CJEU). Several decades on, and after numerous rulings of the CJEU interpreting the WTD – including on issues such as whether hours spent ‘on call’ count for the purposes of determining working hours – the WTD, (and its alleged effects on NHS staffing) was targeted during the UK’s 2016 EU membership referendum by those advocating for the UK to leave the EU.

Following the referendum, and when the UK exited the EU,  it retained in domestic law the rules to which it was bound during its EU membership. That included EU employment laws and the domestic rules implementing them. The Working Time Regulations (WTR) implementing the WTD became part of this body of ‘retained EU law’. In 2023, the UK Parliament legislated in the form of the Retained EU Law (Revocation and Reform) Act to repeal specified retained EU law instruments; the WTR was not included in that list. But Parliament also gave UK ministers powers through delegated regulations to revoke or reform retained EU law in the future.

In May 2023 the UK Government launched a consultation on Retained EU Employment Law. Apart from proposals to revoke a very small number of EU employment law instruments to ‘tidy up’ the statute book in respect of rules that would not operate in the same way outside of EU membership – for example, rules that apply when workers from one Member State are ‘posted’ to another – what is striking about its proposals is that the Government intended to ‘preserve’ key EU employment laws. Notwithstanding that EU employment law had frequently been depicted as a source of restrictive red tape, there did not appear to be the same appetite to make fundamental reforms.

True, as part of its post-Brexit Trade and Cooperation Agreement with the EU, the UK had committed to a set of ‘level playing field’ obligations that included requirements not to lower labour standards. But at the same time, the UK’s approach to that agreement was to protect its regulatory autonomy outside of EU membership in ways that would still allow it to diverge from EU law. Accordingly, reform of the WTR was part of its consultation exercise with a focus on two issues: (1) record-keeping of working hours and (2) simplifying  and changing the calculation of annual leave and holiday pay, particularly for those working irregular hours or part of the year.

Following its consultations, in November 2023. the Department for Business and Trade published a draft Statutory Instrument (SI) to make amendments to retained EU employment law. The new SI – the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 – entered into force on 1 January 2024. What is immediately apparent is that apart from making changes in the limited areas on which it had consulted, the basic legislative architecture of the WTD – and crucially, its interpretation by the CJEU – is preserved. Rather than this being a moment to put the regulation of working time on a ‘sovereign’ domestic legal footing – as the UK Government has intimated it wants to do with the Clinical Trials Directive – what we get instead is a parsimonious set of reforms. Of the two issues consulted upon, changes to the calculation of holiday pay do, however, illustrate a wider point.

The meaning and application of the WTD has been elaborated in multiple rulings of the CJEU. Where these rulings are out of step with the expectations or preferences of EU Member States,  as Nowak has observed, it has proved difficult for the EU legislature to ‘overrule’ the judgments of the CJEU. Historically, the ‘joint-decision trap’ of EU decision-making was a function of unanimous voting among the Member States; this gave any state a veto over any change. Now that the Member States’ governments share legislative power with the European Parliament, it is the potential veto by the Parliament that has inhibited significant reforms to the WTD. Including those that might respond to, or even overturn, judgments of the CJEU

What is obviously different for the UK outside of EU membership is that a government with a majority in the House of Commons has near absolute control over the legislative process: the sovereignty of Parliament is in reality the sovereignty of the Executive. This ‘executive sovereignty’ is also experienced directly when rule-making is delegated to government ministers; which is precisely what the 2023 Retained EU Law Act allows, and of which the 2023 Employment Rights Regulations is an example.

In making changes to the rules on paid leave for those who work irregular hours or only part of a year, these new rules depart from how the WTR had been interpreted by the UK Supreme Court in its 2022 judgment in Harpur Trust v Brazel. In that judgment, the Supreme Court held that entitlement to paid annual leave did not have to be pro-rated for workers who only worked for part of the year e.g. an employed teacher who was only contracted to work during term time. Even if this was more generous than might be suggested by the CJEU’s interpretation of the WTD, a more generous approach was not inconsistent with the Directive itself. In reversing this aooriacg, under the 2023 Employment Rights SI, the accrual method for irregular workers is set out in the Regulations as a pro-rated percentage of the hours worked in a pay period. and is capped to prevent it exceeding entitlements of full-time workers.

It is clear that, when compared with the EU legislature, the UK has an increased capacity to make changes to employment laws in ways that would diverge from EU rules on employment rights The UK can adopt SIs to make such changes far more easily than the EU through its legislative process. But the experience to date is that the UK Government has typically preserved the position derived from EU law – including its interpretation by the CJEU – and made rather modest amendments.  Indeed, when it comes to those changes it has made, it has been more preoccupied with restraining domestic courts from exceeding the minimum standards prescribed by EU employment law than overturning the case law of the CJEU.