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Retained EU Employment Law – The Government’s Response

The Government has recently published its response to the consultation on ‘Retained EU Employment Law’, and to the consultation requirements under TUPE. It has also responded to the earlier consultation on calculating annual leave entitlement for part-year and irregular hour workers following the Supreme Court’s decision in Harpur Trust v Brazel.

Working time record-keeping obligations

The response confirms that the Government will go ahead with the proposed clarification to the record-keeping requirements under the Working Time Regulations (WTR). This makes clear that employers will not have to keep a record of a worker’s daily working hours.

This change is being introduced to address concerns that the ECJ’s ruling in the case of CCOO v Deutsche Bank might require employers to record the duration of time worked each day by each worker, rather than simply keeping adequate records as required by the WTR.

TUPE

The response confirms that the Government will proceed with the planned reforms to the TUPE consultation requirements to permit small businesses with fewer than 50 employees, and businesses of any size undertaking a transfer of fewer than 10 employees, to consult directly with their employees if there are no existing worker representatives, rather than having to arrange elections for new employee representatives.

Holiday entitlement and pay

The Government will introduce ‘rolled-up’ holiday pay for irregular hours and part-year workers, as long as their holiday pay is calculated at 12.07% of their pay and is paid at the same time as their ordinary pay. This will enable workers to receive an additional amount or enhancement to their regular pay instead of being paid when they take annual leave. 

The Government has also decided not to introduce the single annual leave entitlement of 5.6 weeks’ annual leave. Instead, it will maintain the two distinct pots, so that workers continue to receive 4 weeks at the normal rate of pay and 1.6 weeks at the basic rate of pay. However, legislation will clarify what must be included as ‘normal’ pay by requiring the following types of payment to be included:

  • Payments intrinsically linked to the performance of tasks which a worker is contractually obliged to carry out;
  • Payments for professional or personal status relating to length of service, seniority or professional qualifications;
  • Other payments, such as overtime which have been regularly paid to a worker in the last 52 weeks.

The Government will also legislate to restate certain ECJ decisions that it considers necessary to retain workers’ entitlement in relation to the 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.

Harpur Trust v Brazel

In Harpur Trust v Brazel the Supreme Court held that employees who only work for part of the year are entitled to 5.6 weeks of holiday pay like employees that work all year round, which means that all workers are entitled to 5.6 of paid holiday per year, even if they do not work 52 weeks.

With regard to the Harpur Trust ruling, the consultation originally suggested that this might be addressed by introducing a 52-week reference period.  However, given the preference for a simplified approach, the Government has instead decided to implement an accrual method to calculate annual leave entitlement at 12.07% of hours worked in a pay period for irregular hours and part-year workers in the first year of employment and beyond.

This method was widely used before the Harpur Trust judgment and better reflects what workers have actually worked in the current leave year.

Implementation of the proposed changes

The proposed changes do not require primary legislation. A draft statutory instrument has been laid before Parliament, and is intended to come into force from 1 January 2024.

Please note that this is a very brief summary of the key elements concerning the Government’s response to the consultations on holiday pay, TUPE and the Harpur Trust ruling. The contents of this article do not constitute legal advice. If you require any further information please contact us at employment@berrysmith.com or on 02920 345 511.