UK: New government consultations: holiday pay and “fire and re-hire”
The government has launched a consultation on calculating holiday entitlement for part-year and irregular hours workers. This consultation is in response to last year’s Supreme Court decision in Harpur Trust v Brazel in which it was held that, under the Working Time Regulations, holiday entitlement for permanent part-year workers should not be pro-rated so that it’s proportionate to that of a full-time worker. Read our summary of the decision here. The government is proposing to introduce a holiday entitlement reference period for both part-year and irregular hours workers to ensure holiday entitlement and pay is directly proportionate to time spent working.
The government has also published a consultation on a draft Statutory Code of Practice on Dismissal and Re-engagement, so called “fire and re-hire”, applicable in the context of changing terms and conditions of employment. The Code sets out a step-by-step process that employers should follow to explore alternatives to dismissal and to engage in meaningful consultation with trade unions, employee representatives or directly with the affected employees to find an agreed solution. Read our summary of the key background issues here.
Key Action Points for Human Resources and In-house Counsel
The government review on calculating holiday entitlement for part-year and irregular hours workers is in effect looking at reversing the decision in Harpur Trust v Brazel which will be very significant – and welcomed by employers, particularly those in the education sector. This consultation closes on 9 March 2023.
Although the consultation on a Statutory Code of Practice on Dismissal and Re-engagement won’t impose any legal obligations on employers, tribunals must take this into account, and may increase compensation awards by up to 25% if the employer has unreasonably failed to comply with the Code. The consultation closes on 18 April 2023, and the Code will come into force when Parliamentary time allows.