The Government has published the draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (the ‘Regulations’). The Regulations are due to take effect from the 1st January 2024 and affect three areas of employment: TUPE, working time, and annual leave and holiday pay. The Department for Business and Trade identified these areas as requiring amendment to ensure the legislation governing each is fit for purpose.
The Government’s aims for the Regulations to:
- streamline the consultation requirements that apply to smaller business and TUPE transfers;
- reduce time-consuming reporting requirements under the Working Time Regulations; and
- simplify annual leave and holiday pay calculations.
TUPE
The new Regulations will adjust the TUPE consultation requirements that apply to smaller companies, for transfers taking place after 1 July 2024. So, businesses with fewer than 50 employees; and businesses of any size, that are undertaking a TUPE transfer of fewer than 10 employers; will be able to consult directly with their employees (if there are not worker representatives already in place), without having to consult with elected representatives. This extends the existing rule, which is that this exception applies only to businesses with less than 10 employees in total.
Working Time Regulations (‘WTR’)
Regulation 9 of the WTR provides that employers must keep records to demonstrate compliance with certain aspects of the WTR, including the maximum weekly working time and length of night work. As a result of EU caselaw, there has been uncertainty as to the level of detail that employers must keep, in order to comply.
However following consideration of the evidence gathered through Government consultation, the new Regulations clarify that businesses do not have to keep detailed record of workers’ daily working hours, if they are able to demonstrate adequate compliance in other ways.
Annual Leave and Holiday Pay
Addressing the Supreme Court decision in Harpur Trust v Brazel, the Regulations now simplify the calculation of holiday entitlement for workers with irregular hours, and for part-year workers’, by introducing an accrual rate of 12.07% of hours worked for each preceding pay period. The Regulations will permit ‘rolled-up’ holiday pay for some workers (those working part years and irregular hours), from 1 April 2024 onwards. .
The aim of these changes to ensure:
- workers’ holiday entitlement better reflects the hours they work across the year;
- that it is easier for businesses to accurately calculate entitlement for workers with irregular hours where the use of a reference period is not practical; and
- that workers have a clearer understanding of their entitlement.
Employers will now be able to calculate annual leave entitlement using the accrual rate of 12.07% of the hours worked in a pay period for irregular hours workers and part-year workers in the first year of employment and beyond, and such workers are now defined in the Regulations. This is a useful tool to calculate how much leave has been accrued when irregular hours and part-year workers take family leave, including maternity leave (which will be defined as ‘statutory leave’); and employers can take into account the average hours worked over a 52-week reference period, with weeks not worked and time on statutory leave accounted for, so that annual leave is proportionate.
The Government is not proceeding with the creation of ‘one pot’ of statutory annual leave, but instead will retain the two distinct pots of “normal remuneration” (for four weeks of annual leave) and Regulation 13A “basic remuneration” under the WTR (for 1.6 weeks).
Employers will have discretion as to whether they calculate their workers’ holiday pay by using RHP or by using a reference period, as is currently the approach. If employers choose the former, then they must calculate a worker’s holiday pay as 12.07% of the worker’s total earnings within a pay period. Workers will be unable to request RHP.
From 1st January 2024, the Covid Regulations are being repealed which means workers will no longer be able to accrue Covid carry-over leave, but any remaining leave which has been accrued can be used by 31st March 2024, and the right to carry over 1.6 weeks’ leave remains unaffected.
Impact on employers
The Regulations will take effect fairly early during 2024, with limited time for employers to consider and adapt to the changes. But the Government’s hope is that they will give rise to benefits in terms of savings and a reduction in administrative burden in the longer term.