Legal development

Under the consultation spotlight record keeping holiday leave and pay and TUPE

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    Hot on the heels of the government's policy paper titled 'Smarter Regulation to Grow the Economy' (see our client briefing here), the government has published its consultation paper on three areas of retained EU employment law:

    • record keeping requirements under the working time regulations ("WTR");
    • simplifying annual leave and holiday pay calculations in the WTR; and
    • the TUPE consultation requirements.

    The consultation closes on 7 July 2023.

    What are the record keeping proposals?

    The government proposes introducing legislation so that businesses do not have to keep a record of daily working hours of their workers.

    What is proposed on holiday pay?

    The WTR enact the right under the EU Working Time Directive to the four week minimum period of annual leave, but also adds a domestic right to an additional 1.6 weeks' leave.  This is effectively 8 additional days of holiday, which is equivalent to the number of usual UK bank holidays in each year.  Therefore, under the WTR, the standard annual statutory holiday entitlement for a full time worker who works five days per week is 28 days (5.6 weeks).

    For reasons such as the different minimum rates of holiday pay which can be paid for the two periods, this distinction between the two tranches of holiday entitlement is important but creates an additional obligation for some employers' payroll systems.

    To ease this administrative burden, the government is consulting on several proposals.

    Proposal 1

    • Create a single statutory annual leave entitlement of 5.6 weeks which will set out the minimum rate at which holiday pay should be paid. Workers would continue to be entitled to 5.6 weeks of paid statutory annual leave.
    • Introduce a single rate of holiday pay for the 5.6 weeks.  The consultation wants to explore how to define the rate of holiday pay in future legislation.
    • Workers would accrue their annual leave entitlement at the end of each pay period until the end of their first year of employment. Any new regulations (and revised guidance) will provide a clear method for calculating holiday entitlement for workers in their first year of work.
    • The regulations introduced during the COVID pandemic allowing workers to potentially carry over up to 4 weeks of leave into the following two leave years will be removed.

    Proposal 2

    • Introduce 'rolled-up' holiday pay as an option for all workers.  This is where a worker receives an additional amount (for example, 12.07% of pay) to cover their holiday pay with every payslip rather than receiving holiday pay only when annual leave is taken.  Employers would have a choice between using the existing 52-week holiday pay reference period and rolled -up holiday pay to calculate holiday pay for workers with irregular hours.  Rolled-up holiday pay could also be used for workers with regular hours.

    What is suggested in relation to TUPE?

    The government is proposing that for businesses with fewer than 50 employees, employers can consult directly with employees on TUPE transfers where there are no existing employee representatives in place rather than organising elections for employee representatives.

    Furthermore where fewer than 10 employees are transferring, all businesses will be able to consult directly with employees on the transfer where there are no existing employee representatives.

    Does the consultation say anything else?

    The government confirms their intention to preserve rights on for example maternity, paternity, adoption and parental leave and protections for part-time, fixed-term workers and agency workers.

    Further information

    For more information on any of the issues raised in this briefing, please speak to your usual Ashurst contact or to any of the people whose contact details are given below.

    Authors: Crowley Woodford, Partner; and Ruth Buchanan, Partner. 

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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