Are you prepared for the changes to the rules for holiday pay, TUPE, and working time?

Donal Moon, from Moore Kingston Smith’s Employment Law team, explains the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 and its impact on employers.

Background

The Government is introducing new rules to simplify employment law for businesses and workers. These changes, expected to start on 1 January 2024, will affect the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), the Working Time Regulations, and rules about holiday pay.

The TUPE regulations

These regulations apply when a business is sold or when there’s a change in the provider of a service. The new rules will make things easier for small businesses with less than 50 employees and any business transferring fewer than ten employees. These businesses won’t need to elect employee representatives for consultations; they can talk directly to their employees, as long as there’s no trade union or existing representatives.

Working time regulations

Employers currently have to keep detailed records of all working hours and rest breaks for most employees. The new rules will remove this requirement, making it simpler for employers.
Holiday entitlement for part-year workers and holiday pay for workers with irregular hours

In the wake of the 2022 Supreme Court decision of Harpur Trust v Brazel, part-year workers became entitled to their full 5.6 weeks’ holiday, regardless of the number of weeks in the year that they worked. It was decided that employers must use ordinary remuneration over a reference period to calculate holiday pay for workers with irregular hours.

This meant that part-year workers had a holiday entitlement that was disproportionate to hours worked. The calculation of holiday pay became unduly complicated and onerous. This judgment and its fallout had, therefore understandably caused concern for employers.

This change means:

• Holiday entitlement – employers can use the 12.07% multiplier again to work out holiday entitlement for part-year workers;
• Holiday pay – employers can choose between the current method for calculating holiday pay for irregular hours workers or use a simpler “rolled-up” holiday pay, calculated at 12.07%. This needs to be clearly shown on pay slips.

What is not changing?

Calculations for holiday pay still need to include things like commission and bonuses. The rules about carrying over EU-mandated leave are staying the same.

What do employers need to do?

It’s unnecessary to make changes right now, but it’s important to stay updated. We’ll keep you informed about these and other changes in employment law.

Need help?

If you want advice or support with these new regulations, contact Moore Kingston Smith’s Employment Law team. We’re here to help you understand and manage these changes effectively.