Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023
The Government has published the draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023. These Regulations come after its consultation earlier this year on changes to the law on working time, holiday pay and the TUPE Regulations. The aim is to remove unnecessary bureaucracy which hinders the effectiveness of existing employment rights.
The Regulations will take effect from 1 January 2024, giving employers little time to get to grips with the proposed changes. The affected areas of employment law are:
- TUPE: streamlining the consultation requirements for small businesses and small TUPE transfers;
- Working time: simplifying employers’ record keeping requirements under the Working Time Regulations 1998 (“WTRs”);
- Annual leave and holiday pay: clarifying carry-over rights and the calculation of holiday pay.
TUPE consultation changes
The current information and consultation regime under TUPE 2006 will be amended to change the way companies consult with their employees during TUPE transfers. Instead of consulting with elected employee representatives, companies will now be allowed to consult directly with employees themselves in a wider range of cases. This change only applies to TUPE transfers that take place on or after 1 July 2024 and involve:
- a small business (defined as employing fewer than 50 employees); and
- any size of business undertaking a small transfer (defined as fewer than 10 employees).
The exception will only apply where there are no existing employee representatives already in place.
Working time record-keeping
As a result of previous EU caselaw, there is uncertainty over the extent to which UK employers need to keep detailed records of daily working hours and rest periods under the WTRs. The new Regulations clarify that only “adequate” records need to be kept, in such manner and format as employers see fit. In particular, employers need not record each worker’s daily working hours if they can otherwise demonstrate compliance with their obligations under the WTRs.
Carry-over of annual leave
The right of workers to carry over annual leave in limited circumstances is currently derived from retained EU caselaw. The Regulations introduce amendments to the WTRs to expressly restate that workers can carry over:
- The full 5.6 weeks of Regulation 13 and 13A statutory annual leave into the following leave year where it cannot be taken due to family-related leave (such as maternity or shared parental leave);
- The four weeks Regulation 13 annual leave where it cannot be taken due to sickness absence, for a maximum of 18 months from the end of the leave year in which the entitlement arose;
- The four weeks Regulation 13 annual leave where there has been no reasonable opportunity to take it or the employer has failed to notify that any leave not taken, which cannot be carried over, will be lost.
Rolled-up holiday pay
The government’s aim is to simplify the calculation of holiday entitlement for part-year and irregular hours’ workers by introducing an accrual rate of 12.07% of hours worked in each preceding pay period. This counteracts the Supreme Court’s recent decision in Harpur Trust v Brazel by ensuring that such workers will accrue holiday in proportion to the time they work.
Further, “rolled-up” holiday pay will be permitted for part-year and irregular hours workers only for holiday years that start from 1 April 2024 onwards. Employers will be able to apply a 12.07% uplift to pay, provided it is paid at the same time as normal pay and any itemised pay statements specify the amount of holiday pay that is included. This practice is currently unlawful due to EU caselaw which remains applicable to the UK until it legislates otherwise.
Holiday pay
The government decided not to proceed with creating one pot of statutory annual leave of 5.6 weeks. Instead, there will remain four weeks of Regulation 13 leave at normal pay and 1.6 weeks of Regulation 13A leave at basic pay under the WTRs.
However, the Regulations essentially introduce a definition of “normal pay” which includes:
- commission and other payments linked to the performance of contractual tasks;
- payments relating to professional/personal status relating to length of service, seniority or professional qualifications; and
- regular payments in the 52 weeks preceding the relevant calculation date (such as regular overtime).
The government recognises that many employers choose to provide normal pay for employees’ full annual leave entitlement. While the intention is to provide clarity over exactly which payments employers should include, it remains to be seen whether this will be achieved.
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