Following a consultation process, the UK government has recently addressed reforms relating to the Working Time Regulations (WTR), Transfer of Undertakings (Protection of Employment) (TUPE), and holiday entitlement and pay. B P Collins’ employment team provides an overview of the changes set to come into force on 1 January 2024, subject to parliamentary approval.
1.Recording Requirements under the Working Time Regulations (WTR)
It is proposed that employers will no longer be obligated to record the daily working hours of their employees. However, employers must maintain “adequate” records demonstrating compliance with the WTR.
2.TUPE
The government plans to expand circumstances and increase flexibility allowing direct consultation between employers and employees in TUPE transfers (which take place on or after 1 July 2024) instead of through elected employee representatives. This extension applies to businesses with fewer than 50 employees or transfers involving fewer than 10 employees, eliminating the need for elected employee representatives in these specific situations- unless employee representatives are already in place in which case employers will still be required to consult with them.
3.Holiday Pay and Entitlement
The government has retained the two-tiered annual leave entitlement system as set out below:
- Four week’s leave; and
- 1.6 weeks’ leave at basic pay.
The government intends to clarify what should be included in holiday pay for the purposes of the initial four weeks leave and this will include:
- Payments, including commission, intrinsically linked to the performance of tasks which a worker is contractually obliged to carry out.
- Payments for professional or personal status relating to length of service, seniority or professional qualifications.
- Payments, such as overtime payments, which have been regularly paid to a worker in the previous 52 weeks.
New Accrual System for Irregular Hours Workers
For holiday years commencing from 1 April 2024, the government also aims to address the Supreme Court ruling in Harpur Trust v Brazel and will (subject to some particular factual circumstances) introduce a new accrual method to calculate annual leave entitlement of 12.07% of the hours worked in a pay period for irregular hours and part-year workers. This will significantly reduce the applicable administrative burden. Under the proposed new legislation, annual leave entitlement for irregular hours and part-year workers will be calculated at the end of each pay period.
Rolled-Up Holiday Pay
Rolled-up holiday pay, where holiday pay is combined with basic pay, will be allowed in certain circumstances for holiday years commencing from 1 April 2024. This practice has previously been regarded as unlawful. This new approach offers a simplified solution for employers struggling with irregular work schedules.
Under the proposed changes:
Eligibility Criteria: Rolled-up holiday pay will only be available for workers categorised as irregular hours or part-year workers.
Calculation Method: Holiday pay must be at least 12.07% of total earnings during each pay period.
Rules about Carrying Forward Holiday
The government will preserve workers’ rights to carry forward untaken holiday if employers fail to recognise their right to paid holiday, provide a reasonable opportunity to take leave, or warn employees of the risks of losing their entitlement. However, some particular changes made to legislation arising from Covid-19 will be removed.
Additionally, workers will be able to carry forward all of their annual leave if they couldn’t use it due to statutory leave. Furthermore, EU case law in relation to carry over in the event of sick leave will be retained provided such applicable leave is taken within 18 months from the end of the holiday year in which the entitlement originally arose.
Recommendations for Employers:
- Ensure you are familiar with how to maintain ‘adequate’ records to demonstrate WTR compliance.
- Consider streamlining a TUPE consultation process where applicable.
- Consider the new accrual system and applicable holiday pay calculations for irregular hours or part-year workers and ensure policies and procedures are updated accordingly.
This article was prepared by Alix Beese and Catherine Coumidis.
For further information or advice, please contact B P Collins’ employment team on 01753 889995 or email enquiries@bpcollins.co.uk.
