UK: The Retained EU Law Act: Cliff Edge Removed, But Cloud Of Uncertainty Remains

The controversial legislation to enable the Government to revoke or reform retained EU law (the Retained EU Law (Revocation and Reform) Act or REUL Act) has now Received Royal Assent. Although some of the most heavily criticised aspects of the legislation have been removed, it will still create a climate of uncertainty around retained EU law. We explain why and what this means for business. We also highlight the impact of other post-Brexit reforms in areas where EU-derived law remains relevant in the UK.

Key points

• A more moderate approach to sunsetting: In a welcome move, the original "sunsetting" provisions have been replaced with a more modest list of measures to be revoked at the end of 2023. Our view is that for most businesses, the final list is unlikely to give rise to serious concern – see section 1.
  
  
• But there will still be uncertainty: The legislation creates uncertainty over whether the meaning and effect of EU-derived law will remain the same – see section 2. It may also make it somewhat easier to depart from retained EU caselaw – see section 3. Lastly, it gives the Government additional powers to change retained EU legislation on a fast-track basis – see section 4.
  
  
• Removal of directly effective rights: The REUL Act also provides for all "retained EU law rights" to be repealed at the end of 2023, removing rights derived from certain EU Treaty articles. It is likely to have an impact in areas such as employment – see section 9 - and pensions – see section 13.
  
  
• New terminology: The REUL Act states that after the end of 2023, retained EU law is to be known as "assimilated law" (even if it is unchanged by the legislation). Whilst "retained EU law" may well remain in use, formal documents such as pleadings will need to use the new term – see section 4.
  
  
• Other reforms to EU-derived law: Although much attention has focussed on the REUL Act, the
  Government has already embarked on a reasonably significant programme of reform of EU-derived legislation through other Bills, notably in the following areas: consumer protection (see section 6), data protection (see section 8), employment law (see section 9) and financial services (see section 11).

1. What has happened to the "sunsetting" provisions?

Originally, the REUL Act provided for a wide range of EU-derived measures to be revoked automatically at the end of 2023. This approach was heavily criticised, as Travers Smith Partner Ben Chivers explains:

The Government's new list-based approach

That approach has now been jettisoned in favour of a list of just over 600 measures which will be revoked at the end of the year. Our initial assessment is that the impact of those revocations will be limited – although see the discussion of environmental protection measures in section 10 below. This is a very welcome move, which should remove the threat of another Brexit "cliff edge" as described above, together with the risk of measures being revoked by mistake - for an example of a measure which appears to have been overlooked in the Government's "dashboard" of retained EU law, see section 7 on contract and applicable law below.

Don't overlook other reforms of EU-derived law

There are a number of areas where retained EU law is already being reformed independently of the REUL Act, sometimes in quite significant ways – see in particular our commentary on:

• consumer protection, (section 6);
  
  
• data protection and technology (section 8);
  
  
• employment (section 9); and
  
  
• financial services (section 11).

Removal of direct EU rights

The REUL Act also provides for all "retained EU law rights" to be repealed at the end of 2023. For example, although EU Treaty Articles do not form part of retained EU law, certain directly applicable rights have been preserved, such as the right contained in Article 157 relating to equal pay for equal work between men and women. This right will cease to exist at the end of 2023, unless action is taken to preserve it – and is likely to have an impact in areas such as employment (see section 9) and pensions (see section 13). However, as explained here, many rights derived from EU Treaty articles have effectively been disapplied already – so for many businesses, this aspect of the Act may not prove particularly consequential.

2. Why is the legislation still likely to create uncertainty?

The REUL Act removes the principle of supremacy of EU law. It also changes how the outcome of conflicts between certain EU-derived law and domestic law will be resolved and how EU-derived law will be interpreted in future. This could give rise to significant uncertainty over whether the meaning and effect of retained EU law will remain the same, once the relevant provisions come into force.

How will the position on supremacy and conflicts change?

Following the end of the Brexit transition period, the principle of supremacy of EU law was retained in qualified form, so that where there was a conflict between pre-2021 legislation and retained EU law, the latter would continue to take precedence. The REUL Act changes this in two ways:

• EU Regulations etc: The Act provides that where there is a conflict, domestic legislation will take precedence over any "retained direct EU legislation". This includes EU Regulations (such as UK GDPR) which were effectively "copied" over onto the UK statute book and then amended following the end of the Brexit transition period – but not UK legislation implementing EU Directives.
  
  
• EU Directives: When it comes to UK legislation which implemented EU Directives, the REUL Act does not require the courts to give precedence to domestic legislation in the event of a conflict. However, the removal of the principle of supremacy of EU Law means that there will no longer be an automatic presumption that retained EU law "trumps" any conflicting domestic legislation – so it will be possible to argue that in some cases, domestic law takes precedence.

How will the position on interpretation change?

The REUL Act also removes other general principles of EU law, such as proportionality, which can often be important when interpreting EU law (see section 7 of this briefing for more detail). Since the end of 2020, these principles were preserved in qualified form, primarily with a view to ensuring that retained EU law continued to mean what it meant before the end of the Brexit transition period (11 pm on 31 December 2020).

What's the impact?

• On conflicts, UK courts may conclude that the legislation gives them no option but to conclude that an obscure and ancient piece of UK legislation takes precedence over more recent EU-derived legislation, purely on the basis of origin.
  
  
• On interpretation, unless similar principles can be found in UK law (which will not always be the case), UK courts may conclude that they have option but to interpret retained EU law differently in future – even where it appears that no change was actually intended.

In both cases, it will be possible for the Government to restate retained EU law in order to confirm that it takes precedence over conflicting domestic measures and/or to reproduce the effect of EU general principles. However, this potentially generates a great deal of work for the Civil Service, merely to maintain the status quo.

Our survey by practice area below clearly demonstrates that – despite this legislation – a significant volume of EU-derived legislation will remain on the UK statute book, so there is no shortage of raw material for disputes over alleged conflicts with domestic legislation or new interpretations following the removal of EU general principles. We have also highlighted a number of instances where the Government wishes to preserve the status quo and may therefore need to take action to effectively "negate" the impact of the REUL Act – see in particular section 13 on pensions.

3. How does the REUL Act make it easier for the courts to depart from retained EU caselaw?

When interpreting retained EU law, rulings of the Court of Justice of the European Union (CJEU) are binding on UK courts where they were made on or before 11 pm on 31 December 2020. The REUL Act does not change this, nor does it seek to extend the power to depart from such rulings to lower courts; this power can only be exercised by the Supreme Court, the Court of Appeal and other courts at the same level as the latter. However, the legislation does make it somewhat easier for cases to reach the Court of Appeal or Supreme Court so that departures from pre-2021 CJEU case law can be considered, without the need for an appeal to reach those courts. It does this in the following ways:

• Lower courts will be able to make references to the Court of Appeal (or the Supreme Court if appropriate), asking them to reconsider a pre-2021 CJEU ruling where they believe that a point of "general public importance" is at stake; and
  
  
• In certain fairly limited circumstances (for example where the parties to litigation relating to retained EU caselaw did not appeal), Government law officers, such as the Attorney General, will be able to seek a reference to the Court of Appeal (or the Supreme Court if appropriate). They will also be able intervene in cases where a court is considering whether to depart from retained EU case law to argue in support of a particular outcome.

In practice, a key issue will be how much persuasion the courts will need before agreeing that a point of "general public importance" is at stake; if the threshold is set too low, this may encourage some parties to seek references on points of EU law primarily as a tactic to increase delays and costs in litigation.

Departing from pre-2021 CJEU rulings: new factors to consider

The legislation also contains additional factors for the Court of Appeal and the Supreme Court to take account of when considering whether to depart from retained EU case law. Among other things, the courts must have regard to "any [relevant] changes of circumstances" and "the extent to which the retained EU case law restricts the proper development of domestic law." However, it is not clear to us that these factors add a great deal to the current test, which permits departures from retained EU case law "where it appears right to do so"; this already leaves the courts with a broad discretion, allowing them to take account of a wide range of factors (including those listed in the REUL Act).

4. What are the new powers to change retained EU legislation?

The REUL Act gives the Government a raft of new powers in relation to retained EU legislation. It will be able to do the following, in most cases with only limited Parliamentary scrutiny (which effectively allows the draft legislation to be fast-tracked):

• Restate: this may mean using different words or concepts from those used in the original EU-derived measure, although this should not involve any significant changes beyond wording intended to "resolve ambiguities", "remove doubts or anomalies" or improve "clarity or accessibility". The power could also be used to reproduce the measure "as is". Any restated law will no longer be regarded as retained EU law (even where no change has been made).
  
  
• Revoke or replace: this could involve significant changes, as the broadest power here allows for replacement with such alternative provision as is considered "appropriate" (which appears to give Government a broad discretion). Government must also be satisfied that any replacement does not increase any regulatory burden (so it is unlikely to be possible to use the powers to impose higher standards, for example).
  
  
• Update: there is an express power to update EU-derived measures in response to "changes in technology" or "developments in scientific understanding".
  
  
• Remove or reduce burdens: there is also an express power to make changes to retained EU legislation which involve removal or reduction of regulatory burdens (as defined in the Legislative and Regulatory Reform Act 2006). This route would most likely be used to effect changes intended purely to reduce or remove red tape (and not to achieve any of the other objectives listed above).

For an example of some of the issues that arise from revocation and replacement, see the discussion of consumer protection legislation in section 6 below.

What about Parliamentary scrutiny and consultation?

In the House of Lords, attempts were made to strengthen the requirements for Parliamentary scrutiny of the use of these powers when making more significant changes to retained EU legislation. These were rejected on two occasions by MPs and the Lords eventually backed down. However, the Government did give the following assurances:

• it will follow the recommendations of the sifting committee that measures which make more significant changes should be subject to debate in Parliament; and
  
  
• "when making significant changes to retained EU law" using its powers to replace existing legislation, it will "follow the usual protocols on public consultation."

"Retained EU law" to become "assimilated law" from 2024

The REUL Act provides that after the end of 2023, the term "retained EU law" should be dropped in favour of the term "assimilated law". Other than perhaps disguising the origin of any EU-derived measures which have been preserved, it is not clear to us what this change is supposed to achieve. However, assuming that it becomes law, it will be important to be aware of it; for example, judges are likely to feel obliged to use "assimilated law" when discussing EU-derived law from 2024 onwards and it will need to be used in pleadings and other formal documents.

5. Company law and M&A

Most EU-derived company law is being left in place and the current company law reform proposals aim only to address economic crime and transparency, rather than wholesale replacement of EU law.

The key statute is the Companies Act 2006, which – though primarily a creature of UK law – also incorporates many provisions derived from EU law. Alongside this, there are many EU-derived statutory instruments which play an important role, such as the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, and the equivalent regulations for small companies and groups; these will continue to form an integral part of the financial reporting regime for UK companies. In some areas, EU Regulations (which have been "copied across" onto the UK statute book, albeit amended so as to function properly following Brexit) also play an important role, as in the case of the Audit Regulation, which will continue to form an integral part of the audit regime for UK companies. Whilst the Companies Act 2006 would not have been at risk under the original sunsetting provisions of the REUL Act, the other measures outlined above would have been.

Reform of UK capital markets

Separately from the REUL Act, however, the Government is undertaking significant post-Brexit reforms relevant to the UK capital markets regime - see our briefing on changes to the UK listing, prospectus and secondary fund-raising regimes.

6. Consumer protection

Although no consumer protection legislation is on the list of measures to be revoked by the REUL Act, the Digital Markets, Competition and Consumer Bill (DMCC Bill) will make important changes to EU-derived legislation in this area. Among other things, it will revoke and replace the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which set out the law on unfair commercial practices, such as misleading promotions.

Rewording EU-derived legislation

The revocation and replacement of the CPRs by the DMCC Bill is not always being done using exactly the same wording as the original, EU-derived version (which largely followed the wording of the relevant EU Directive). In some areas, the DMCC Bill goes further and seeks to tighten up the wording. For example, the current version of the CPRs provides that the following practice is automatically regarded as unfair, without needing to show an adverse impact on the consumer's behaviour: "Falsely claiming that a product is able to cure illnesses, dysfunction or malformations". Among other things, the DMCC Bill proposes broadening this to encompass false claims that a product can "modify a person's appearance". In other areas, the DMCC Bill changes the wording of the CPRs without making it entirely clear whether the intention is to change the meaning in a significant way (although the explanatory notes state that the intention is to "recreate the legal effect (with minor amendments)" of the CPRs). This may mean that as and when the DMCC Bill comes into force, existing case law on the CPRs (including UK case law) will only have persuasive authority, as the courts will be looking at a new statute, which may in certain respects need to be interpreted slightly differently.

7. Contracts and applicable law

We had previously expressed concern that the Government might use the REUL Act to repeal the Commercial Agents Regulations. Among other things, these Regulations give commercial agents the right to claim post-termination payments designed to reflect the goodwill that they have built up on behalf of the principal during the agency. This legislation is not on the list of measures to be revoked – but it's unclear whether the Government has considered it as part of its review of retained EU law.

Has the Government overlooked the Commercial Agents Regulations?

At the time of writing, the Commercial Agents Regulations did not appear to be on the Government's list of retained EU law. As the Regulations implemented an EU Directive, we find it hard to see why they should not be regarded as part of retained EU law. We believe this vindicates our concern – and that of many others – that had the Act gone ahead in its original form, it could well have led to some measures being revoked as a result of an oversight. We would also argue that, as they confer important rights on commercial agents, they cannot properly be regarded as being effectively redundant (unlike most other measures on the list of revocations) and should not in our view be removed without proper consultation.

Applicable law: Rome I and Rome II

The original draft of the legislation also raised a question mark – at least in theory - over the future of two pieces of retained EU law, UK Rome I and UK Rome II, which provide the English courts with a framework for determining the law applicable to contractual and non-contractual claims. Whilst we would have expected the Government to take action to preserve these, we can now confirm that they are not on the list for revocation either and will therefore remain in place. That said, it's worth noting that both these measures are derived from EU Regulations and as such may be affected by the changes to the rules on interpretation outlined in section 2 above.

Other Brexit-related changes

We are not aware of any further plans to reform EU-derived law in these areas – and generally speaking, EU law has had a limited impact on English contract law. There have, however, been changes to the position on jurisdiction clauses following Brexit; see our short video and our in-depth note on the implications of Brexit for dispute resolution.

8. Data, e-commerce and tech

The original draft of the legislation raised a question mark – at least in theory – over the future of two cornerstones of the UK's data protection law framework, the UK GDPR and the Privacy and Electronic Communications (EC Directive) Regulations 2003, SI 2003/2426 (PECR). It's now clear that they will be retained, as they are not on the list of measures to be revoked. However, it was always expected that they would have to be preserved because the Data Protection and Digital Information (No.2) Bill (DPDI Bill), which is currently before Parliament, has been drafted on the basis that they will remain in place – although the DPDI Bill will make a number of important changes to them. This is a further example of an area where retained EU law is being reformed outside the framework of the Act.

Until now, the Government's scope to provide for exemptions to general rights and obligations under Schedules 1 and 2 of the Data Protection 2018 (DPA) has been governed by UK GDPR. There have, for example, been two successful challenges where the courts have ruled that the "immigration exemption" in Schedule 2 to the DPA is incompatible with Article 23 of the UK GDPR. The REUL Act's removal of the supremacy of retained EU law over domestic UK legislation means, however, that amendments to the DPA, including those made by the DPDI Bill, would by default take precedence over the provisions of the UK GDPR. This technically gives the Government more scope to restrict data subject rights through the exemptions and makes challenges like the ones to the "immigration exemption" harder to mount in future. In practice, the UK has a strong interest in not diverging too much from the EU in this area, as this would put its EU data adequacy ruling at risk (which would make it harder to exchange personal data with data controllers and processors based in the EEA).

E-commerce and tech

When the draft legislation was first published, Meta expressed its concern over the impact on the Electronic Commerce (EC Directive) Regulations 2002. Among other things, these provide that online services that transmit, store and/or make available information provided by users are not liable for such user content. This is subject to certain provisos such as not having actual knowledge of the information (and this has led to "notice and takedown" processes). These Regulations are not on the list of measures to be revoked, nor are we aware of any plans to reform them. That said, platforms such as Meta are being confronted with legislation such as:

• the Online Safety Bill which seeks to impose more obligations on them over policing of content; and
  
  
• the Digital Markets, Competition and Consumers Bill, which will give the UK's competition regulator, the CMA, new powers to regulate Big Tech.

These are also areas where the EU has been active, although it is taking a somewhat different path from the UK – so this is an area where we are already seeing a degree of divergence.

9. Employment

Apart from a relatively minor measure relating to the working time of tanker drivers, no employment legislation is on the list of measures to be revoked. However, in a separate initiative, the Government has recently proposed changes relating to holiday and business transfers. As explained in this briefing, the changes are likely to be welcomed by many employers, but do not amount to a radical reform. The Government also plans to consult on proposals to limit the maximum duration of non-compete restrictions in employment contracts to 3 months – although this is something that it could have done even if the UK had remained in the EU (for more detail, see this briefing). The upshot of this is that the vast majority of EU-derived employment law will remain in place, including measures relating to:

• Working time: minimum annual leave entitlement, maximum weekly working hours, minimum rest breaks and rest periods (Working Time Regulations 1998) – but see this briefing for details of the proposed changes regarding holiday for irregular hours workers.
  
  
• Business sales and outsourcing: automatic transfer of employees on the sale of a business or outsourcing of services, and information and consultation requirements (Transfer of Undertakings (Protection of Employment) Regulations 2006) – but note that some changes are proposed to the rules on informing and consulting employees.
  
  
• Part-time and fixed-term discrimination: rights of part-time and fixed-term employees to parity of terms when compared with full-time and permanent employees (Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002)
  
  
• Agency workers: right for agency workers to comparable pay and benefits terms when compared with directly engaged employees (after 12 weeks), and right of access to vacancy information and collective facilities (Agency Worker Regulations 2010)

In some cases, the UK regulations go further than the EU law which they implement, for example the UK provides for 5.6 weeks' annual leave which is greater than the 4 weeks' annual leave required by the EU Working Time Directive. There are currently no plans to change this, even though the UK would in theory be free to do so.

Impact on equality law

Over many years a large body of European case law has built up on which Employment Tribunals rely when considering employment claims under domestic law, particularly in relation to issues of equality. As explained in section 3, the REUL Act creates a new route for the principles established by this case law to be reopened, leading to uncertainty for employers on interpretation of the law. For example, European case law has effectively set out the approach that employers should take in relation to calculating holiday pay and accrual of holiday during long term sickness absence. For some further examples of the influence of EU caselaw, see section 13 on Pensions.

Also, certain equal pay claims rely on directly effective EU law (under Article 157 on equal pay for equal work). Unless action is taken to preserve the relevant rights, these will no longer be available once the Act comes into force. Although it will remain possible to bring equal pay claims under similar provisions of UK law, Article 157 is wider in certain respects (for example, it extends to some types of pay which are not covered by the UK equal pay law). It follows that the level of protection in equal pay claims between men and women is likely to be reduced if this directly effective right is not preserved.

10. Environment

A large number of the measures to be revoked (over 350) fall under the remit of the Department for the Environment and Rural Affairs (DEFRA). Whilst this total may appear somewhat alarming from an environmental protection perspective, several hundred of the measures appear to relate to fishing arrangements that the UK is no longer part of, having left the EU. Most of the remainder appear to be measures which are similarly redundant or inoperable following Brexit.

That said, there are some surprising themes to those listed for deletion – notably the list includes legislation relating to air pollution control and climate change (specifically greenhouse gas and ozone depleting substance targets which implement international agreements and will presumably therefore need to be replaced). Similarly, several revocations relate to renewable energy and energy efficiency, which could also undermine the Government's net zero commitment if not swiftly replaced or strengthened.

What about the Government's commitment not to row back on environmental protections?

Attempts were made in the House of Lords to put into law a commitment to non-regression on environmental matters. The amendment would have provided that regulations could only be made if the relevant national authority was satisfied (having sought advice from independent experts) that the regulations would not reduce the level of environmental protection arising from retained EU law. There was widespread support, including from the Office of Environmental Protection, for such a clause, but the Government deemed this "unnecessary" in light of similar protections in the Environment Act 2021. Several speakers in the House of Lords expressed concern about the Government's refusal to enshrine into law what it effectively said it would do in any event. The Government did not offer much by way of reassurance when towards the end of the debate, it said that the concept of "non-regression" was not clear enough to appear in primary legislation (despite the provisions of the Environment Act) and would result in the courts needing to intervene regularly to determine whether a particular regulation was regressive or not. Ultimately, the Lords conceded the point and the legislation returned to the House of Commons without the amendment. The Government has made numerous public statements to the effect that it does not intend to "row back" on environmental protections – but whilst this can be expected to have an impact politically, it does not carry the force of law.

Tough decisions ahead: the Government's divergence dilemma

Although the REUL Act will not have the dramatic impact on EU-derived environmental legislation that many feared, the Government has some difficult decisions ahead on whether to diverge from the EU's approach in a range of areas, including:

• Chemicals regulation, where the EU's REACH Regulation is largely ported straight into UK law with only administrative changes. encompasses many aspects of chemicals regulation, from animal testing, to data sharing, to consents for use and substance bans. The Government has yet to decide whether to continue to align with the EU in this area or to rework the legislation to reflect its desire for a sovereign approach to regulation. Many in the industry doubt that the benefits of divergence would outweigh the disadvantages.
  
  
• ESG and sustainability reporting, where the EU's ambition to ensure that those playing in its grounds do so by its rules. The implementation of the Non-financial Reporting Directive remains on the UK's statute book, but is being replaced in the EU by a significantly broader reporting obligation under the Corporate Sustainability Reporting Directive, that also directly captures UK (and other non-EU) companies with significant operations in the EU. As the UK starts to debate what its own sustainability reporting regime should look like, rather than easing the regulatory burden, it is clear that divergence in this area will likely create a double burden for UK businesses. See our briefing on the originally proposed standards and the Commission's update.

11. Financial services

From the outset, EU-derived financial services legislation was carved out of the legislation, and this has not changed. Instead, the Government is looking to the Financial Services and Markets Bill (currently before Parliament) to reform the UK's post-Brexit financial services regime.

As explained in our briefing, the changes are likely to result in the UK diverging from the EU's approach in a number of important respects. In addition, many EU-derived provisions will migrate from the statute book into regulators' rule books, with the possibly of further changes as part of this process.

12. Intellectual property

Bodies including the UK Intellectual Property Office, the IP Federation, the Chartered Institute of Trade Mark Attorneys and the British Copyright Council had all expressed a high level of concern over the original sunsetting provisions in the legislation - so the Government's change of heart is likely to have been greeted with a sigh of relief in the world of IP. Apart from a small number of measures which are effectively redundant, the list of EU-derived legislation to be revoked does not appear to include any material piece of legislation relating to IP.

There are, however, various areas of IP where the Government has indicated previously that it may want to diverge from the EU, such as overlapping copyright and design protection for designs, as well as the complex system of protection for designs. The IPO had told stakeholders that its work on the designs consultation was on hold while it conducted further work to ascertain the impact of the legislation – but it may now be able to return to potential reform of the designs regime.

What about the impact on caselaw?

EU caselaw has also been important in a number of areas of IP; for example, the British Copyright Council notes that EU caselaw has significantly expanded the scope and availability of copyright protection. As explained in section 3, the REUL Act creates a new route for the principles established by this case law to be reopened, which may give rise to uncertainty.

13. Pensions

A very large amount of pensions legislation, including – for example - on scheme funding and governance, derives from EU directives but no pensions law is on the list of measures to be revoked and we do not expect the Act to result in any changes in those areas. The Act could, however, at least in theory have a significant impact on pensions law because – as explained above (see section 2 and section 3) – it changes the way that EU-derived legislation may be interpreted and applied and creates a new route to reopen European caselaw. Examples of areas where this could arise include the following:

• TUPE and early retirement pensions: When the employees of a business transfer to a new employer (e.g. following an acquisition or on an outsourcing), the new employer is not required to replicate the old employer's occupational pension scheme retirement benefits. However, CJEU caselaw has established that the new employer is required to replicate redundancy early retirement pensions. It has never been decided by the courts whether this also applies to pensions paid early where the early retirement is voluntary but it is sometimes assumed that it does. This could in theory now be subject to different interpretation by the UK courts.
  
  
• Pension Protection Fund (PPF) compensation regime: In the Bauer case in 2019, the CJEU ruled that pensions less than fully protected in an insolvency situation could not be reduced to the extent that it would put the individual below an "at-risk-of-poverty" threshold. This has presented difficulties for the PPF, which does not know about the financial circumstances of those to whom it pays compensation. The Government has previously indicated that it wishes to do away with this underpin (but only in respect of future insolvencies) – which suggests that it may legislate to clarify the point. However, the REUL Act could open the way for a different interpretation of the relevant UK legislation or a decision to depart from the caselaw in Bauer, which could obviate the need for legislation.

Areas where the Government may need to legislate to prevent change

Although the main aim of the REUL Act is arguably to encourage divergence from EU law, it will also – somewhat ironically perhaps – give rise to some situations where the Government may need to legislate in order to be confident of preserving the status quo. Here are two examples:

• Minimum PPF compensation: In Hampshire v PPF, the CJEU found that the Pensions Act 2004 PPF compensation terms were not adequate to comply with the Insolvency Directive and that minimum 50% protection is required in all cases (a PPF compensation cap means that for some high earners less than 50% compensation is payable). Although the PPF changed its approach in response to the ruling, the relevant UK statute was never amended to include the 50% underpin – which could open the way for this point to be revisited, particularly following the changes in the REUL Act. However, after an initial announcement to the contrary, the Government has indicated that as a matter of policy it wishes to retain the minimum 50% protection; as a result, it may conclude that it needs to legislate in order to put this beyond doubt.
  
  
• Discrimination: A similar issue may arise with Walker v Innospec Limited, which concerned equal survivor pensions for same sex partners. UK law provided that such pensions need only be given in respect of service from 5 December 2005. The Supreme Court found that cut-off date incompatible with the EU Framework Directive and ruled that it must be disapplied, meaning that same sex partners are entitled to equal pension scheme survivor benefits in respect of all of their service. All schemes have now (or should have) implemented this ruling. But the UK statute still includes the 5 December 2005 date. As it would be controversial for Walker ever to be reversed, we would expect the Government to retain it – but as with the point about PPF compensation terms above, the additional uncertainty introduced by the REUL Act may strengthen the case for legislating to remove the cut-off date in the statute.

14. What's the timing?

The REUL Act received Royal Assent on 29 June 2023, but not all of its provisions come into force immediately. In particular, the revocation of measures listed in the Act will not take effect until the end of 2023. In addition, at the time of writing, a date still needed to be set for the provisions relating to interpretation of retained EU law (see section 2) and retained EU caselaw (see section 3) to be brought into force. However, the powers to change retained EU legislation came into force on Royal Assent.

Originally published 29 June 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.