Following consultation processes upon which we have previously reported, the Government has published its response and draft legislation.

The intention is that the legislation comes into force on 1 January 2024 and key elements are:

Changes to holiday pay

The Government has sought to address the confusion generated by the Supreme Court’s decision in Harpur Trust v Brazel on the issue of holiday pay for part-year and irregular hours workers. The new regulations therefore provide that for part-year and irregular hours workers (as defined):

• They will accrue annual leave at a rate of 12.07% of hours worked
• Pay for such annual leave may be paid by way of rolled-up holiday pay (i.e an uplift to their normal pay).

The new regulations also clarify that:

• where workers have been unable to take holiday due to statutory leave, they may carry forward holiday to the following leave year
• where workers have been unable to take holiday due to sick leave, they may carry forward such holiday, provided that it is taken within 18 months of the end of the holiday year in which the leave arose.

The Government had also consulted upon unifying the rules on holiday pay because we currently have one set of rules in relation to the EU required four weeks of holiday (based on EU case law) and a different rule for the additional 1.6 weeks granted by the UK. However, they have decided not to proceed with this and we therefore retain two rules for calculation of holiday pay:

• “normal pay” for the four weeks
• “basic pay” for 1.6 weeks

(although for administrative or other reasons, many employers now use normal pay for all holiday pay)

Changes to TUPE for small transfers

TUPE derives from EU law, so the Government is now able to amend it, although its proposals are not particularly dramatic:

The proposed change is that, where there is no recognised union, employers will not need to elect representatives and will be able to inform and consult directly with individuals where either:

• The employer employs fewer than 50 employees; or
• There are fewer than 10 transferring employees.

Clarification of WTR record-keeping requirements

A 2019 European Court of Justice decision had caused confusion for employers by suggesting that the Working Time Directive (and therefore the Working Time Regulations) required employers to keep records of daily hours worked by every employee. The Government is no longer bound by ECJ decisions and will therefore amend the Working Time Regulations to clarify the position.

The regulations will provide that the employer must have records to show that it has complied with:

• The weekly working limit of 48 hours
• Opt-out agreements
• Length of night work
• Health assessments for night workers

However:

• The records may be created, maintained and kept in such a manner and format as the employer reasonably thinks fit
• An employer need not record each worker’s daily working hours if the employer is able to demonstrate compliance without doing so

This reform is intended to clarify that there is no intention to impose an unreasonable administrative burden on employers and, for example, for employees who work 35 hour weeks and who due to the nature of their work are never in danger of approaching the 48 hour weekly limit, it would not be reasonable to expect the employer to keep a record of all daily hours.