Navigating Employment Changes: Decoding the Latest Government Reforms

We unravel the changes that will impact employers following a review of the government’s response to consultations on holiday, working time, and TUPE reforms and the unveiling of draft legislation, which has set the stage for significant changes.

Setting the Scene: Post-Brexit Review and Beyond

As part of its post-Brexit strategy, the government has been re-evaluating laws derived from EU legislation. Initially, there were plans for automatic revocation of all EU-retained legislation by the end of 2023. However, a strategic U-turn in May 2023 led to a more targeted approach, focusing on specific EU laws, including employment-related statutes like the Working Time Regulations 1998 (WTR) and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

The recent response to consultations on holiday, working time, and TUPE reforms provides a glimpse into the government’s intentions. While some changes aim to align with EU principles, others leverage new legislative powers to diverge from established norms.

Irregular Hours and Part-Year Workers

The major spotlight falls on reforms addressing holiday entitlement and pay for irregular hours and part-year workers. Responding to the complexities highlighted by the Supreme Court decision in Harpur Trust v Brazel, the government proposes two mechanisms:

• 07% Accrual: An alternative to the initially suggested 52-week-averaging mechanism, this method accrues annual leave at a rate of 12.07% of hours worked per pay period, capped at 28 days per leave year.
• Rolled-Up Holiday Pay: Introducing a statutory option for employers to pay holiday pay with a 12.07% uplift, commonly known as ‘rolled-up holiday pay.’

If passed, these changes will take effect from April 1, 2024, prompting employers to swiftly review and align their practices.

Other Working Time Changes

• Holiday Pay Rules: The government proposes formalising the inclusion of various payments in the calculation of a week’s pay for Regulation 13 leave, ensuring compliance with EU and UK case law.
• Carry-Over Rules: The draft legislation provides statutory grounds for carrying over leave in situations such as maternity or family-related leave and periods of sick leave.
• Record-keeping: Aiming for clarity, the legislation clarifies that businesses are not required to keep daily working hours records.

TUPE Reform: Expanding Flexibility

In a modest extension, the government broadens the exception allowing micro-businesses to inform and consult directly with affected employees during TUPE transfers. This flexibility now extends to businesses with fewer than 50 employees and small transfers with fewer than 10 employees.

If approved, these exceptions will apply to transfers on or after July 1, 2024.

Charting Your Course: Next Steps for Employers

As an employer, the impact of these changes depends on your organisation’s nature and workforce composition. Irregular hours and part-year workers may be significantly affected, necessitating a thorough review of contracts, policies, and processes. Key areas for consideration include:

• Identification of irregular hours and part-year workers.
• Review of existing holiday accrual and pay arrangements.
• Evaluation of necessary changes to contracts, policies, and payroll processes.
• Ensuring clarity in policies regarding the use and carry-over of leave.

Stay ahead of the curve by navigating these changes with a proactive approach. The evolving employment landscape awaits, and the team of employment law specialists at Employment Law Services (ELS) LTD are here to guide you through its complexities. If you have any specific queries regarding employment issues, Contact Us  and our multi-award winning Employment Law and HR Team will provide you with commercially focused advice and support.