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Retained EU Law (Revocation and Reform) Bill

27/09/2022

On 22 September 2022, Jacob Rees Mogg, the new Business Secretary introduced to the House a Commons an extremely wide-sweeping Bill to revoke certain retained EU law.

The Bill, when enacted, will extend to England and Wales, Scotland and Northern Ireland.

The purpose of the Bill is to end ‘the special status’ of the majority of retained EU Law on 31 December 2023. In other words, this means that the principle of the supremacy of EU law, general principles of EU law, and directly effective EU rights will end on 31 December 2023.

Before 31 December 2023, the Bill provides that Government departments and the devolved administrations (here the Northern Ireland Executive) will determine which retained EU law can expire, and which needs to be preserved and incorporated into domestic law.

In addition, the Bill has provisions for a ‘sunset date’ by which all remaining retained EU Law will either be repealed or assimilated into UK domestic law. The sunset date may be extended for specified pieces of retained EU Law until 2026.

The Bill was introduced to the House of Commons and given its First Reading on 22 September 2022. This stage is formal and takes place without any debate. The next step is for MPs to consider the Bill at Second Reading. The date for second reading has not yet been announced, but we expect it to be shortly given the very short 15-month time frame for the proposals contained in the Bill.

Commentary

It was widely expected that, under the new Prime Minister, the government would abolish some rights that are derived from the EU as she was quoted as saying that there would be a ‘bonfire of rights. Many expected that she would select certain issues that were perceived to cause difficulties, such as those under working time rights. However, instead she has decided to abolish all EU-derived rights and leave it to the devolved nations to select those rights that they wish to retain. This is one of the most significant changes to employment law and done at speed (15 months). Given the haste, it is likely that there will be a lack of clarity around the changes which normally only serves to fuel further litigation.

For example, the repeal (unless selected to be retained) would include:

  • Working Time Regulations
  • Agency Worker Regulations
  • Part Time Worker Regulations
  • Fixed Term Employees Regulations
  • Transfer of Undertakings

In addition to this, the courts will no longer give supremacy to EU law.

As each devolved nation is also responsible for selecting what to retain etc., this makes further divergence between GB and Northern Ireland even more likely.

It will also be interesting to see how this Bill interacts with the dedicated mechanism under Article 2 of the Protocol. Article 2 provides that there should be no diminution of the rights, safeguards and equality of opportunity provided in the Good Friday Agreement as a result of the UK leaving the EU.  As some EU Directives underpin the Good Friday Agreement, they are protected by Article 2. These include Equality Directives covering discrimination on grounds of protected characteristics (gender, racial or ethnic origin, religion or belief, disability, age and sexual orientation) and promote equal treatment. Article 2 therefore ensures that the minimum standards required by these Directives continue to apply in Northern Ireland post-Brexit.

The text of the Bill can be found here and ‘News Story’ here

MINI BUDGET

On 23 September 2022, the Chancellor announced what was called a Mini-Budget but in reality, was very fulsome. It contained some of the biggest tax cuts in 50 years including:

  • The removal of the additional 1.25% increase to NIC
  • Lowering of the basic rate of tax from 20% to 19%
  • Removal of the higher rate of tax of 45% so highest rate is 40%
  • Increase to corporation tax (to 25%) to be abolished – remains at 19%

The Chancellor also announced the reversal of IR35, which would mean that the hirer is no longer responsible for paying correct tax. This was unexpected and will be welcomed by businesses who have struggled to categorise contractors, not helped by the poor HMRC CEST (Check your employment Status) tool.

See The Growth Plan 2022: documents

The Mini Budget has certainly been met with some controversy, but without doubt has some benefits for business.

On 26 September 2022, the Chancellor provided an update on his Update on Growth Plan implementation. An update on next steps following the Growth Plan which the Chancellor set out on 23 September 2022. The Chancellor has stated that supply side reforms will be outlined from October, the Medium-Term Fiscal Plan will be published on 23 November 2022 together with a fiscal forecast. See Update.