New regulations, ‘The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023’, are due to come into force from 1 January 2024, which will affect three areas of employment:
- Annual leave/holiday pay
- The Working Time Regulations
- TUPE
This briefing note focuses on the changes to annual leave and holiday pay, with a brief overview of the changes to the Working Time Regulations and TUPE.
Annual Leave/Holiday Pay
Calculation of holiday entitlement
The calculation of holiday entitlement will be changed as a result of the Harpur Trust v Brazel [2022] UKSC case in which the Supreme Court ruled that holiday pay should not be pro-rated for part-year workers and that workers or employees on permanent contracts who only work part of the year are entitled to 5.6 weeks’ paid holiday per year. This is the same entitlement as full-time workers who work for the entire year.
The Regulations will 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, which is a return to the previous position for holiday pay before this was declared unlawful.
Other changes
The Regulations will also introduce other changes such as:
- Carrying forward holiday: it will be possible to carry over up to 4 weeks’ annual leave until the end of the first year.
- Carrying forward accrued holiday: if holiday has been missed due to sickness or family-related absence, holiday can be carried forward until the end of the next holiday year. For family-related absence, up to 5.6 weeks’ can be carried forward, and for sickness up to 4 weeks.
- Workers will no longer be able to carry forward any Annual Leave for Covid-19 unless it was accrued before 1 January 2024.
Although these laws are not yet in force, it does look like they will be soon (although it is possible that the regulations will not be introduced or may be delayed), and so it is advised that you start preparing for this change now.
Preparation
The school will need to ensure that, once the regulations come into force, that holiday pay is calculated and paid in accordance with them.
Until then, the current position is that holiday pay for those with irregular hours and/or those on temporary contracts with regular/irregular hours will need to have holiday leave and pay calculated by reference to the 52-week holiday pay reference period.
If this is not being complied with now, there is potential for these employees to bring unlawful deductions from wages claims, which will usually be limited to deductions made in the past two years.
If this has not already been done as a result of the Harpur Trust case, it is therefore worth going through the contracts of the relevant employees and working out what the liability for these could be if these employees do come forward with a claim, as currently those who work for only a small amount of the year could be entitled to a higher proportion of their annual earnings in holiday pay.
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. 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.
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 employees, will be able to consult directly with their employees without having to consult with elected representatives. This extends the existing rule, which is that the exception applies only to businesses with less than 10 employees in total.
Further Information
For further information on the Employment Rights Regulations please contact a member of our Schools HR team at schoolshr@wslaw.co.uk or 0345 026 8690.