A draft statutory instrument has been published, modifying the laws on working hours, TUPE and holiday pay.
The new Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (“ER Regulations”) are set to take effect from 1 January 2024, overturning some recent EU case law while reaffirming some existing EU case law in the statute books.
Specifically, the new Regulations will amend the Working Time Regulations 1998 to reduce time-consuming reporting requirements, and simplify annual leave and holiday pay calculations, as well as amend the Transfer of Undertakings (Protection of Employment) Regulations 2006 to streamline the regulations that apply when a business transfers to a new owner.
The new provisions will also revoke the European Cooperative Society (Involvement of Employees) Regulations 2006.
Holiday pay calculations are to be simplified by making rolled-up holiday pay lawful for those working irregular hours and part-year workers. Holiday will accrue at 12.07% of hours worked each pay period, capped at 28 days. Holiday pay will be based on average weekly earnings, ignoring unpaid weeks. This is welcome clarification following the Supreme Court decision in Harper Trust. These changes will apply for holiday years starting on or after 1 April 2024.
In addition, ‘normal remuneration’ has been defined to include commission and other payments, such as regular overtime payments.
Holiday carry over
Existing EU case law in relation to holiday carry over rules during sick or statutory leave has now been been mirrored and incorporated within the regulations to ensure they will continue to apply under the new legal framework.
The new ER Regulations will permit employers to choose to pay rolled up holiday pay for irregular hours workers and part year workers – i.e. they will be allowed to pay a “holiday pay enhancement” on top of the worker’s wages. Rolled up holiday pay will need to be calculated using the worker’s total earnings over the relevant pay period. Previously, this only applied to workers with irregular working hours.
In a move to alleviate administrative obligations on employers, the requirement to keep detailed records of working hours and rest breaks for all staff has been removed, provided that “the employer is able to demonstrate compliance [with the Working Time Regulations] without doing so”.
From 1 July 2024, businesses with fewer than 50 employees, and businesses of any size transferring 10 or fewer employees under TUPE, can consult with employees directly, if there are no existing representatives.
While the draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 still need to complete the final stage of the legislative process, significant changes are not anticipated. For advice on how to prepare your organisation for the changes, contact us.
Last updated: 10 November 2023