Significant New Regulations on Holidays and TUPE

The Government recently published its response to a consultation that sought to address issues with the current laws around working time, holidays, and TUPE.

As part of that, the Government has published draft regulations called the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (the “Regulations”).

The Regulations are expected to come into force on 1 January 2024 and bring with them important changes to the laws on holiday entitlement and pay, TUPE and certain working time rules.

Myerson Solicitors' Employment Lawyers picked out some of the most noteworthy changes below.

A worker is an irregular hours worker, in relation to a leave year, if, under the terms of their contract, the number of paid hours that they will work in each pay period during the term of their contract in that year is wholly or mostly variable.

This may catch certain agency workers and casual or zero-hours workers.

A worker is a part-year worker, in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year, and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.

Periods of sick leave or statutory leave (such as maternity leave) are ignored. This is likely to catch seasonal workers and some term-time workers.

In addition, the Regulations allow employers to give rolled-up holiday pay to irregular-hours workers and part-year workers.

A practice that has previously been deemed unlawful, rolled-up holiday pay is where a worker’s holiday pay is spread out across the year evenly by adding a top-up amount to their normal payslip and paying this at the time the work is done, rather than it being calculated and paid as and when the holiday is taken.

It is generally seen as a useful payment method for workers with unpredictable working hours, and it is still commonly used in various sectors.

Suppose employers choose to pay rolled-up holiday pay. In that case, they will be required to calculate 12.07% of a worker’s “total earnings” over a pay period (which includes the more generous “normal remuneration” rules derived from EU law, which count certain payments of commission where intrinsically linked to the performance of tasks under the contract and also regular overtime payments).

Currently, micro-businesses with fewer than ten employees may inform and consult affected employees directly if there are no existing appropriate representatives in place (for example, if there is no recognised trade union).

In other cases, appropriate representatives must be elected, informed and consulted on behalf of individual employees.

The Regulations will extend that flexibility to consult directly with individual employees to businesses with less than 50 employees and also to businesses of any size if they are involved in a TUPE transfer of fewer than ten employees.

In either case, the employer will be able to consult directly with employees where no existing employee representatives are in place.