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The government has responded with its final plans on various aspects of retained EU law, covering TUPE, the Working Time Regulations and holidays and holiday pay.

The relevant consultation papers were published earlier in 2023: Smarter Regulation to Grow the Economy and Calculating Holiday Entitlement for Part-Year and Irregular Hours Workers. The government’s response is contained in Retained EU Employment Law.

WTR record keeping

The response confirms that the government will clarify that employers do not have to keep a record of workers’ daily working hours. This is in response to a 2019 ECJ judgment which indicated that employers would need to comply with increased record-keeping requirements by recording the duration of time worked each day by each worker, rather than simply needing to ensure ‘adequate’ proportionate records in the context of a given workplace and particular working patterns.

TUPE

The government will press ahead with amending TUPE to allow employers with fewer than 50 employees (and businesses of any size carrying out a small TUPE transfer of fewer than 10 employees) to inform and consult directly with affected staff where there are no existing worker representatives in place.

Holidays and holiday pay

The response confirms that rolled-up holiday pay will be introduced, enabling workers to receive an additional amount to their regular pay instead of being paid when they actually take annual leave. But this will only apply to irregular hours and part-year workers.

The response confirms that the government will not create a single pot of 5.6 weeks’ annual leave. Instead, it will maintain the two pots of 4 weeks’ EU-derived annual leave and 1.6 weeks’ domestic leave. EU-derived leave will continue to be paid at a worker’s normal rate of pay and domestic leave will continue to be paid at a basic rate of pay. As to what 'normal pay' is, the draft regulations (see below) don’t use the expression ‘normal pay’ but they do specify that, going forward, pay for the 4-week EU-based leave entitlement must include:

• payments, including commission payments, which are intrinsically linked to the performance of tasks which the worker is obliged to carry out under the terms of their contract
• payments for professional or personal status relating to length of service, seniority or professional qualifications
• other payments, such as overtime payments, which have been regularly paid to the worker in the last 52 weeks

With regard to the issue highlighted by the Harpur Trust decision, the original proposal was to introduce a 52-week reference period. The response abandons this idea. Instead, it has been decided to introduce an accrual method to calculate annual leave entitlement at 12.07% of hours worked in a pay period for irregular workers and part-year workers in the first year of employment and beyond. Other workers will continue to accrue leave in the first year of employment as they do now.

The government is also restating various pieces of retained EU case law that it considers 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 their leave due to being on maternity/family related leave or sick leave and introducing a method of accrual of annual leave for irregular hours and part-year workers when they have had other periods of maternity/ family related leave or sick leave.

The Department for Business and Trade has published a guide to this new holiday regime - see Holiday Pay and Entitlement Reforms from 1 January 2024. 

All of the above changes are contained in the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, which come into force on 1 January 2024 and will change part-year workers' holiday entitlement from 1 April 2024. Until then, part-year and irregular hours workers remain entitled to 5.6 weeks' unreduced statutory holiday.