Next steps in EU employment law reform

Following our update in May on the Government's proposals for reforming EU derived employment law, the Government has now published a consultation paper setting out its proposals on holiday pay, TUPE consultation and working time records. 

The Government has also reiterated its commitment to retaining the majority of the EU derived employment protections. The paper could not be clearer on this, stating:

 'We will ensure that people continue to enjoy key protections as they do currently by preserving important retained EU employment law, including:

•  Maternity and Parental Leave etc Regulations 1999
• Paternity and Adoption Leave etc Regulations 2002¹ 
• Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
• Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
• The Agency Workers Regulations 2010
• Information and Consultation of Employees Regulations 2004
• Transnational Information and Consultation of Employees Regulations 1999'.

The amendments to holiday pay rules and TUPE, if implemented, will be important but not sweeping. The paper is also clear that no further changes are planned to the Working Time Regulations or TUPE.

Holiday proposals

The consultation proposes to merge the current ‘basic’ and ‘additional’ annual leave entitlements to create a single annual leave entitlement of 5.6 weeks governed by one set of rules, thus removing the administrative burden and complications arising from administering payroll systems that distinguish between the two distinct amounts of annual leave entitlement with different rules. 

The consultation also proposes to introduce rolled-up holiday pay, so that workers receive an additional amount or enhancement with every payslip to cover their holiday pay, so as to provide them with income when they do take holiday. If implemented, workers will therefore have to save for their holiday instead of being paid as usual when they take leave. Arguably this can disincentivise people to take annual leave.  

TUPE proposals

The Government proposes to change the consultation requirements of TUPE in order to simplify the transfer process. In particular, it proposes that all small businesses (those with fewer than 50 employees) – and not just micro-businesses with fewer than 10 employees as is currently the case – 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. It also proposes that businesses of any size will be permitted to consult directly with employees (where no existing employee representatives are in place) where a transfer of only a small number of employees (fewer than ten) is proposed.

It should be emphasised that these are proposals, and their implementation will depend on the Retained EU Law Revocation and Reform Bill completing its passage through Parliament, which is ongoing at the time of writing.

If you are interested in responding to the consultation questions, the consultation closes at 11.59pm 7 July 2023.