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On the 8th November 2023 the Government released The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, draft legislation to implement important changes to holiday rights under the Working Time Regulations. This draft legislation is likely to come into force on 1st January 2024.

How will Holiday entitlement and Holiday pay change?

These changes come following the Supreme Court decision of Harpur Trust v Brazel which discussed holiday entitlement and holiday pay for irregular-hour workers.

The legislation will simplify holiday pay calculations by making rolled-up holiday pay (12.07% of pay) lawful for part-year workers and those who work irregular hours. This means employers if they choose to do rolled-up holiday pay they will be required to calculate a worker’s holiday pay as 12.07% of the worker’s total earnings within a pay period. This payment will also need to be clearly marked on the pay slip as Rolled Up holiday pay.

What else will the legislation introduce?

The new legislation will also make clear that various EU case law will remain part of UK law post Brexit to allow carry over of the following:

  • All statutory annual leave to the following year when a worker is unable to take their leave due to being on family related leave;
  • Regulation 13 leave (4 weeks per year) for a maximum of 18 months where a worker is unable to take their leave due to sickness; and
  • Regulation 13 leave where the worker has not been given opportunity to take the leave or the employer has failed to inform them that any leave not taken and which cannot be carried over will be lost.
  • Normal Renumeration will also be defined for the purposes of holiday pay for Regulation 13 leave to include commission payments and other payments, such as regular overtime payments.
  • Remove the additional working time record keeping requirements set out in ECJ judgment in CCOO v Deutsche Bank (which had held that working hours and rest records must be kept for almost all members of the workforce even if they worked regular hours).

What about TUPE?

The Act will also introduce new measures when it comes to TUPE as it will allow small businesses (with fewer than 50 employees) doing TUPE transfers of any size and businesses of any size undertaking a small transfer (of fewer than 10 employees) to consult their employees directly if there are no existing representatives in place.

Thoughts on the change

There are some big changes coming into play here and many have had mixed views on the changes as the consultation only showed 6% of employers agreed to the proposal and 33% disagreed. Although, the legislation states it is implementing a simpler method of holiday pay calculations, around 55% of employers have expressed they do not believe that their payroll systems will be able to carry out the calculation.