As 2023 draws to a close, we consider some legislative changes expected to have effect very soon which impact the emotive, and timeous, subject of holidays.
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (‘2023 Regulations’) is currently in draft form and will amend the Working Time Regulations 1998 (‘WTR’) and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE Regulations’). It is expected to come into force on 1 January 2024, if approved by Parliament.
Other than implementing key employment rights which are derived from EU law into UK legislation, we have set out the main amendments the 2023 Regulations propose to make below.
Amendments to the WTR
Record keeping requirement under the WTR
Firstly, the 2023 Regulations propose to remove the requirement for employers to have a system in place to record employee working time. At present, employers are required to keep adequate records of employees’ working time to ensure their compliance with the WTR. In particular, case law has imposed a duty for employers to set up a system for recording the daily working time of workers. The 2023 Regulations propose to remove this requirement as implementing such a system can be costly for employers. If passed, employers will be able to demonstrate their compliance by other means. In practice, this means that employers will be able to record working hours manually or in a manner that works for their business.
Simplifying annual leave and holiday pay calculations under the WTR
Furthermore, the 2023 Regulations propose to amend the WTR by simplifying holiday pay calculations for part-year workers and those who work irregular hours. For instance, the 2023 Regulations propose to introduce a new method of calculating holiday pay for these workers based on the 12.07% formula, with workers accruing holiday entitlement at the rate of 12.07% of the hours worked in a pay period. This method of calculation was historically used by employers but recent case law had cast doubt on the effectiveness of the calculation.
The 2023 Regulations also propose to enable employers to pay rolled up holiday pay for irregular hours and part-year workers. Rolled up holiday pay is when a worker receives their holiday pay as an enhancement with their payslip instead of receiving payment when annual leave is taken. Currently, case law has declared this practice as unlawful and, hence, employers have been required to pay holiday pay when holidays are taken.
Calculating holiday pay for a part-year or part-time worker is currently a huge administrative burden for employers who do not outsource this function, therefore, the above proposed amendments provide clarity and streamline how holiday pay should be calculated, this will be welcomed by employers that engage part-time and/or part-year workers.
Amendment to the TUPE Regulations
The 2023 Regulations propose to amend the TUPE Regulations by altering the requirement to elect employee representatives. Currently, under the TUPE Regulations, employers must inform and consult with employee representatives. However, employers with fewer than 10 employees can comply with this requirement by informing and consulting affected employees directly if there are no existing employee representatives. The 2023 Regulations propose to amend this requirement by allowing employers with fewer than 50 employees to inform and consult with employees directly. The process of electing employee representatives can be a huge administrative burden for small businesses as there are strict regulatory rules that must be complied with.
What does this mean for employers?
Employers should be aware of the above amendments and make sure their policies and internal systems are in keeping with the amendments, and in particular, ensure that their method of calculating holiday pay is in line with the amendments and that staff who deal with this are appropriately trained to deal with any queries.
Upon reading this Article if you would like further advice, please do not hesitate to contact us, our Employment Law solicitors would be happy to help.