Legislation update
Changes to holiday pay, TUPE and working time regulations
The Government has now responded to consultations on holiday pay, TUPE and working time regulations and has published a draft statutory instrument (with changes likely to come into force in January 2024). Many of the changes were foreshadowed in the consultation papers and a May 2023 policy paper and are generally employer-friendly.
Holiday pay
Background
In January 2023, the Government released a consultation seeking to address the "disparity" in holiday pay between part year/casual workers and full year workers created by the Supreme Court case of Harpur Trust v Brazel (for more on this case and the consultation, read our update here from February 2023).
That consultation closed in March 2023. The Government also released a further consultation on the simplification of holiday pay more generally (amongst other things), which closed on 7 July 2023 (see our update here for more).
Government's response / draft legislation
The Government has now published its response to both of the holiday pay-related consultations as well as a draft statutory instrument. It is making changes to the calculation and payment of holiday pay for part year and casual workers:
- Simpler calculation method: The Government is introducing a simpler (and arguably fairer) way of calculating holiday entitlement for these workers. This new approach is in line with previous ACAS guidance (issued before the controversial decision in Harpur Trust v Brazel) and means that employers can go back to calculating holiday by simply multiplying hours worked during the relevant pay period by 12.07%.
- 'Rolled up' holiday pay: Instead of being paid holiday pay during a period of actual leave, workers can receive their holiday pay 'rolled up' as an addition to their regular pay. This only applies to part year and casual workers.
Practical takeaways for employers
This is a welcome development for employers with part year or casual workers. It means employers can simplify and streamline their processes for calculating and paying holiday pay.
Working Time Regulations
Background
The Government also consulted on reducing Working Time Regulations reporting burdens, as part of the consultation which closed on 7 July 2023 (see our update here for more).
Government's response / draft legislation
The Government's consultation response and draft statutory instrument confirm that, as proposed during the consultation, the requirement on employers to measure the actual daily working time of individual workers (under retained EU case law, namely CCOO v Deutsche Bank) in order to be compliant with Working Time Regulations will be removed.
Practical takeaways for employers
This is welcome news for employers, who may now keep records "as the employer reasonably thinks fit" in order to comply with the requirements of the Working Time Regulations.
TUPE
Background
The Government also consulted on minor tweaks to simplify TUPE as part of the consultation which closed on 7 July 2023 (see our update here for more).
By way of reminder, TUPE protects employees when the organisation for which they work transfers to a new owner (or when a service transfers to a new provider).
Government's response / draft legislation
The Government's consultation response and draft statutory instrument confirm that, once in force, very small businesses (<50 people) will be able to consult directly with employees (rather than via an elected employee representative) where the transfer is also small (<10 people affected).
