UK Government announces reforms to holiday pay, working time and TUPE

The Government has published its response to its recent consultation ‘Retained EU Employment Law’, which contained proposals for reform of the calculation of annual leave and holiday pay and record-keeping requirements under the Working Time Regulations (WTR), and to the consultation requirements under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). 

The Government has at the same time responded to an earlier consultation on calculating annual leave entitlement for part-year and irregular hours workers following the Supreme Court’s decision in Harpur Trust v Brazel. Legislation giving effect to the changes was published soon after the response.

The following changes will be put into effect:

• the TUPE consultation changes;
• clarification of the WTR record-keeping requirements;
• 'rolled-up’ holiday pay for irregular hours and part-year workers will be made lawful;  
• calculating annual leave for irregular hours and part-year workers by working out 12.07% of hours worked and basing holiday pay on this figure will be made lawful (the lawfulness of doing this was called into question by the Harpur Trust decision).
• an annual leave accrual method of 12.07% of hours worked for irregular hours and part-year workers will be made lawful (the lawfulness of doing this was called into question by the Harpur Trust decision);
• clarification of what must be included in 'normal remuneration' for holiday pay purposes.

The new rules contain some further technical changes to the calculation of holiday pay but the intention is to make lawful methods that were in any event widely used before the Harpur Trust decision. The Government also intends to keep in UK law various pieces of retained EU law that it considers will be necessary to protect workers who need to carry over leave because of, for example, maternity/family-related leave or sick leave. These would otherwise have been repealed at the end of this year.

As for the proposed change to the record-keeping requirements under the WTR the intention is to make it clear that businesses do not have to keep a record of workers’ daily working hours, after an ECJ decision suggested that this was a requirement.

On TUPE, the Government will go ahead with its proposal to change the rules on consultation about a TUPE transfer:

• all businesses with fewer than 50 employees will be permitted to consult directly with employees if there are no existing employee representatives in place, rather than having to arrange elections for new employee representatives;
• businesses of any size will be permitted to consult directly with employees (where no existing employee representatives are in place) where a transfer of fewer than ten employees is proposed.

The Government response can be read here.

If you need any further advice on the changes, including details of when they will come into effect, please contact the member of the employment team with whom you usually deal.