The Employment Rights (Amendment, Revocation, and Transitional Provision) Regulations 2023
These Regulations are coming into force in January 2024. They affect the Working Time Regulations 1998 and the operation of TUPE (Transfer of Undertakings) Protection of Employment Regulations 2006.
The headlines are as follows:
- Provisions to allow for the carry over of annual leave for workers on family/maternity leave or sick leave.
The reintroduction (following recent case law changes) of (a) the annual leave accrual method of 12.07% hours - worked and (b) the option for rolled up holiday pay, for irregular hours and part-year workers.
- Simplification of TUPE Informing and Consulting Regulations for small employers, and small transfers.
- Statutory clarification of what to include in holiday pay.
Summary
Firstly, the Government is trying to clarify rules about carrying forward holiday which have become complicated with case law decisions over the years. It is putting into statute that workers will be able to carry forward their whole 5.6 weeks statutory annual leave entitlement into the next holiday year if they can’t take it due to family leave and maternity. It is also going to clarify the case law position that workers will be able to carry forward their 4 weeks of EU based annual leave entitlement if they can’t take it because of sick leave, but that it must be used up within 18 months of the end of the holiday year in which the entitlement originally accrued.
The draft Regulations also state that workers can carry forward untaken holiday if employers wrongly classify them (e.g. as independent contractors when in reality they are employed). If employers don’t warn the employees of the risk of losing their annual leave entitlement at the end of the holiday year or if they don’t give a reasonable opportunity to take their leave or encourage them to do so, then the draft Regulations also propose that a worker can carry forward.
Secondly, the proposals seek to clarify that (only for irregular hours or part-year workers) rolled up holiday pay is to be allowed and that likewise holiday pay can be calculated at 12.07%, for such workers as was previous ACAS guidance (before case law in Harpur vs Brazel last year cast doubt on this system). This will be welcome news for employers with irregular and part-year workers, who have had quite a headache over recent times. These changes will come into effect for holiday years starting on or after 1st April 2024.
The Regulations also put into statute the position that has been developing in case law for many years; that holiday pay must include normal, overtime, and commission payments. Some thought the Government was going to abolish the difference between the 4 weeks EU leave and the additional 1.6 weeks UK leave however it has not done so. The Regulations will say that the 4 weeks EU leave must be paid at normal pay which includes regular overtime and commission etc but in contrast an additional 1.6 week’s leave can (if the employer provides) be paid at basic pay only. Many employers of course, for administrative reasons, don’t differentiate between the two parts of leave in any event.
Finally, there are some changes to the TUPE Regulations. The informing and consulting regulations under TUPE have always been complicated and were more aimed at the mass unionised workplaces of the past than most small businesses these days. Recognising that, the Government is changing some of the provisions so that small businesses (those with fewer than 50 employees) will be permitted expressly to consult directly with employees if there are not any existing employee representatives and thereby dispense with the rather laborious processes for arranging elections in TUPE transfers. Furthermore, where there is a transfer of fewer than 10 employees proposed (regardless of the size of the business) the Regulations will make clear that employers can consult directly with employees, if existing employee representatives don’t exist. Changes to the TUPE regulations apply to transfers on or after 1st July 2024.
It is a welcome change, although in reality many employers have effectively been doing this for years in any event, as employees usually wish to be consulted directly rather than through employee representatives.
