UK: Holiday Entitlements and Pay; TUPE: Legislation Changes

Irregular hours workers and part-year workers: New rules for calculating holiday pay will apply for part-year and irregular hours workers, for holiday years from 1 April 2024:

• Rolled-up holiday pay – where workers receive an additional amount or enhancement to their normal pay to cover their holiday entitlement – will be allowed for these workers if:
• Holiday pay is calculated at 12.07% of all pay for work done
• The 12.07% element is paid at the same time as pay for the work done
• The worker’s holiday pay is itemised separately in their payslip
• New accrual system – these workers will accrue annual leave entitlement on the last day of each pay period at the rate of 12.07% of the number of hours they have worked during that pay period, subject to a maximum of 28 days per year. This new provision has been introduced in response to last year’s Supreme Court decision in Harpur Trust v Brazel in which it was held that, under the WTR, holiday entitlement for permanent part-year workers should not be pro-rated so that it’s proportionate to that of a full-time worker.

Recording working time: Employers will be required to keep ‘adequate’ records, instead of a full record of the daily working hours of their workforce.

Holiday pay and normal numeration: The government has decided not to proceed with its proposal to merge the four weeks’ EU-derived statutory leave with the additional 1.6 weeks’ leave entitlement under UK law. So workers will continue to have a minimum entitlement to four weeks’ leave at normal pay and 1.6 weeks’ leave at basic pay.

The new regulations clarify that the following should be included in normal remuneration for the four weeks’ leave:

• Payments, including commission, 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
• Payments, such as overtime payments, which have been regularly paid to the worker in the previous 52 weeks

 

Holiday carry-over: The new regulations intend to restate current EU principles on carrying forward untaken holiday in certain situations, including where workers are unable to take holiday due to being on family leave or sickness.

Holiday accrual: The government’s proposal to change the way that a worker’s leave is calculated in the first year of employment has been dropped.

 

TUPE consultation: The government has also confirmed that it will proceed with its planned TUPE reforms, which will apply to TUPE transfers taking place on or after 1 July 2024. Employers that do not already have worker representatives in place will be able to consult directly with employees for consultation on a TUPE transfer, if:

• The business has fewer than 50 employees
• The proposed transfer involves fewer than 10 employees

Key Action Points for Human Resources and In-House Counsel

Employers should review their holiday pay practices and policies, and contracts, and consider whether changes are needed to comply with the new rules.