Government responds to consultations on holiday pay, TUPE and annual leave entitlement for atypical workers

In its response to the consultation on ‘retained EU employment law,’ the Government has made amendments to the following areas of employment law:

• annual leave and holiday pay,
• record keeping requirements under the Working Time Regulations 1998 (WTR), and
• consultation requirements under Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

These amendments are set to kick in on 1 January 2024.

Annual Leave and Holiday Pay

What the Government will do

Introduce new regulations to govern holiday entitlements for “irregular hours workers” and “part-year workers”. These new regulations will provide:

• holiday accrual based on 12.07% of the hours worked in the previous pay period, and
• a right for employers to implement “rolled-up” holiday pay. If employers choose to implement this, workers would receive an uplift to their normal pay of 12.07% instead of being paid when holiday is taken.

The caveat – it’s only for irregular hours workers and part-year workers (which could include agency staff). Other workers and employees are unaffected by these new regulations.

What the Government won’t do

• Introduce a single annual leave entitlement incorporating four weeks’ basic annual leave governed by EU law and the 1.6 weeks additional leave prescribed by the WTR. Currently, there are different rules for calculating holiday pay and carry-over rights for four weeks’ leave and 1.6 weeks’ leave, and the Government has indicated that it wanted to simplify this by amalgamating the two kinds of leave. However, the government has decided not to go ahead with this for the time being.

The Government has indicated that more reforms are coming to the rate of holiday pay and that they will produce legislation that will explain what needs to be included in the normal payment for holiday pay purposes.

The Government will keep workers’ protection and entitlements around the carry-over of annual leave in circumstances such as paternity, maternity, illness, etc.

The new regulations for irregular hours workers and part-year workers will contain similar protections.

Record Keeping

The Government will amend the WTR so that employers do not have to keep a record of the daily working hours of all workers. However, this will only apply if employers can demonstrate compliance with the 48-hour week and night work rules without needing to keep a record of daily working hours of all workers.

TUPE

Currently, small businesses with less than 10 employees may inform and consult affected employees directly if there are no existing appropriate representatives (for example, a recognised trade union)
The Government has decided to remove the requirement to elect employee representatives for the purpose of TUPE consultation, for:

• Businesses with less than 50 employees.
• Businesses of any size involved in a transfer of less than 10 employees.

If you have any questions or queries about the TUPE process then please read our guide for a helpful explanation