Publish date

30 November 2023

Brexit and employment law: Government announces proposals to amend working time and TUPE regulations

On 8 November 2023, the Government published its response to two consultations concerning reforms to employment law. The response proposed new regulations that would impact on various areas of employment law; holiday pay, working time and the TUPE regulations. The new regulations are expected to come into effect as soon as 1 January 2024. Employers will need to get on top of these ahead of the new year.

This article summarises the key changes that have been announced.

What change to holiday pay are being introduced?

EU law surrounding holiday pay will generally be retained but some important changes will be made.

Currently employees have two holiday entitlements, this being 4 weeks on the basis of EU law and 1.6 weeks on the basis of UK law. The current position is that holiday pay for the 4 weeks’ EU leave must be calculated using the employee’s ‘normal pay’. ‘This includes any regular overtime or commission attributable to the employee. In respect of the 1.6 weeks’ leave under UK law, such items do not have to be taken into account.

The Government considered combining the two types of leave but ultimately decided that these they will be kept separate and will retain their different methods of calculating holiday pay.

In a departure from EU law though, rolled up holiday pay will be permitted for irregular hours workers and part year workers.

Rolled up holiday pay is where holiday pay is rolled up into basic pay and so is not paid when the worker takes holiday. Irregular hours workers are defined as someone for whom the number of paid hours they work in each pay period mostly varies. Typically this would cover zero hours or casual workers.

The Government will reverse the Brazel v Harpur Trust case regarding calculating holiday entitlement for those who work part of the year or irregular hours.

The new regulations will permit the practice, that was common before the Brazel decision, that such workers will accrue holiday at the rate of 12.07% of total hours worked. This approach had a simplicity to it given the difficulties in calculating holiday accrual where the employer does not know in advance how many days or hours will be worked per holiday year.

These changes open the door for employers of casual workers to go back to previously adopted methods of calculating holiday. But before doing this employers should consider how and when any changes should be implemented and review the terms of contracts to ensure they are not breached in making the changes.

How are TUPE consultation requirements changing?

TUPE currently requires pre-transfer consultation with a recognised trade union or employee representatives. Where there is no recognised union and no standing body of employee reps, employers must carry out elections to appoint such representatives. This can be burdensome for small businesses, especially where only a handful of employees are transferring.

The proposed reforms will exempt employers from the requirement to consult with employee representatives where the employer has fewer than 50 employees or where less than 10 employees are transferring (irrespective of size of business).

In these circumstances the employer will be able to consult directly with the employees. This is often the preferred approach for employers and employees where large numbers are not involved and the transfer is not contentious.

Recording working hours

Employers will no longer be required to record the number of hours worked each day by their employees in order to show compliance with the working time rules. That this was a requirement may come as a surprise to many readers!

There was European case in 2019 that suggested all employers should have a system in place for recording actual daily working time for each employee. The position was never entirely clear and the Government has taken the view that if this is what the case was requiring, it was disproportionate.

There will still be a requirement to keep such records “as the employer reasonably thinks fit”. This leaves some scope for interpretation. We expect that more thorough record keeping will be expected in respect of night workers, transport businesses and employees in safety critical roles. But less so in respect of a 9 to 5 administrative office role, for example.

The background to the consultation is that Brexit allows the Government to depart from EU employment law. This has led to a, rather rushed, review of EU employment law. The Government has identified the above areas as impediments to growing the economy, which will now be removed from, we expect, the start of 2024.

If you have any questions about the topics raised in this article then please get in touch with the Employment team.

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