On 7 November 2023, the draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (draft Regulations) were laid before Parliament, and on 8 November 2023 the Department for Business and Trade published Consultation Response: Retained EU employment law reforms (Consultation response). The publications follow the conclusion of a DBT consultation to reform retained EU employment law (May 2023 DBT consultation) launched in May 2023 (see FC Feature 12 May 2023) as well as the former Department for Business, Energy & Industrial Strategy's Consultation: Calculating holiday entitlement for part-year and irregular hours workers (January 2023 BEIS consultation), published in January 2023 (see FC Feature 13 January 2023). The draft Regulations, which cover the same topics as the November 2023 consultation response, are subject to approval by a resolution of each House of Parliament. They would come into force on 1 January 2024.
Q&A references in this feature are to Working time & holiday pay unless otherwise stated.
Consultations
In the May 2023 DBT consultation, the government had proposed to:
- reduce record keeping requirements under the Working Time Regulations 1998 (WT Regulations 1998) in relation to most members of the workforce following the 2019 CJEU judgment in Federación de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE C-55/18 (CCOO judgment) (see Q&A here);
- simplify annual leave and holiday pay calculations in the WT Regulations 1998 and introduce 'rolled-up' holiday pay (RHP) (see Q&A here); and
- simplify the requirements to consult employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations 2006).
The January 2023 BEIS consultation followed the Supreme Court decision in Harpur Trust v Brazel [2022] UKSC 21 (see FC Case Feature 7 September 2022) that the correct interpretation of the WT Regulations 1998 was that holiday entitlement for part-year workers should not be pro-rated so that it is proportionate to the amount of work that they actually perform each year. That consultation had proposed introducing a 52-week holiday entitlement reference period for part-year workers and workers with irregular hours, based on the proportion of time spent working over the previous 52-week period.
Consultation response
WT Regulations 1998 record keeping requirements
The government confirms its intention to remove the effects of the CCOO judgment, in particular to clarify that an employer need not record each worker's daily working hours and to address the risk that current record keeping requirements might change. Employers will still need to keep adequate records to demonstrate compliance with the WT Regulations 1998.
Holiday pay
The government will not be introducing a single annual leave entitlement, following feedback that a single entitlement would only be beneficial alongside a single rate of holiday pay. Instead, it will retain the two distinct 'pots' of annual leave and two existing rates of holiday pay (namely, ‘normal’ and ‘basic’: see Q&A here). The government intends to legislate to clarify what is considered normal remuneration.
The government will also:
- introduce RHP as an option for irregular hours workers and part-year workers, which it notes would include some agency workers;
- legislate to introduce an accrual method to calculate entitlement at 12.07% of hours worked in a pay period for irregular hour workers and part-year workers in the first year of employment and beyond; and
- restate retained EU case law to the extent necessary to retain workers' overall level of protection and entitlement in relation to carry-over of annual leave when a worker is unable to take leave due to being on sick leave or maternity or family related leave.
TUPE Regulations 2006
The government will proceed with planned reforms to TUPE consultation requirements. In particular, it will extend flexibility for employers to consult directly with employees before a TUPE transfer (see TUPE, Q&A here). Small businesses (with fewer than 50 employees) and businesses of any size undertaking transfers of fewer than ten employees will be eligible to consult directly with their employees if they do not already have worker representatives in place.
Draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023
The draft Regulations were published alongside a draft Explanatory Memorandum and address the areas of reform covered in the Consultation response in exercise of powers under s 13 Work and Families Act 2006 and ss 11(1) and (6), 14(1) and (3), and 20(1) Retained EU Law (Revocation and Reform) Act 2023.
The draft Regulations will also revoke the European Cooperative Society (Involvement of Employees) Regulations 2006 and the Working Time (Coronavirus) (Amendment) Regulations 2020, which no longer have any effect in practice.
First featured on the Employment News Service on 8 November 2023.
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