Government announces changes to employment law from 1 January 2024

Yesterday, the government published its response to consultations on ‘Retained EU Employment Law’ and an earlier consultation on the calculation of annual leave entitlement for part-year and irregular hours workers, which arose following the Supreme Court’s decision in Harpur Trust v Brazel.

Several proposals are being taken forwards which will lead to changes to employment law, enshrined in a new piece of legislation, the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, which will come into force on 1 January 2024. 

The government has described the reforms as removing ‘unnecessary bureaucracy in the way those [existing workers’] rights operate, allowing businesses to benefit from the additional freedoms we [the UK] have through Brexit’[i].

Details of the changes are provided below.

Simplification of annual leave and holiday pay calculations for irregular hours and part-year workers

The government has confirmed that:

• an accrual method for calculating holiday entitlement for irregular hours and part-year workers from 1 January 2024 will be introduced.  Entitlement will be calculated as 12.07% of hours worked in a pay period;
• ‘rolled-up’ holiday pay will be introduced, which will enable workers to receive an additional amount or enhancement to their regular pay, instead of being paid when they take annual leave, but only for irregular hours and part-year workers; and
• it will define in legislation what is meant by irregular hours and part-year workers.

The above accrual method and rolled-up holiday pay were widely used before the decision in Harpur Trust v Brazel and this will bring welcome relief to many employers who are grappling with the best way to calculate holiday pay and entitlement for irregular hours and part-year workers.

Carry-over of annual leave

The government will amend the Working Time Regulations 1998 (‘WTR’) to retain workers’ overall level of protection and entitlement in relation to the carry-over of annual leave into the next leave year, where a worker is unable to take their leave due to being on maternity/family-related leave, sick leave, where there is a failure to recognise their true employment status or a failure to afford the right to paid annual leave. 

These protections would otherwise be lost at the end of 2023 due to a piece of legislation which makes provision to remove laws which have been retained from the EU.

Record keeping requirements under the Working Time Regulations 1998

The government intends to remove the current uncertainty surrounding employers’ record keeping obligations, along with the related potential high cost of implementing a system of recording working hours under the WTR.  Legal clarity on the record-keeping requirements will be provided and businesses will not have to keep a record of workers’ daily working hours.

Consultation under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’)

Currently, where there is a business transfer or a change in service provision, employers with ten or more employees are required under TUPE to elect employee representatives through which to consult with employees affected by the transfer.  This is an onerous obligation that creates complexity and difficulty for small employers.

The government will change the consultation obligations so that all small businesses (those with fewer than 50 employees) and businesses of any size undertaking a small transfer (of fewer than 10 employees) to consult directly with employees if there are no existing employee representatives in place.

Restatement of EU case law under the Equality Act 2010 (‘EA’)

In addition to the above, the Equality Act 2010 (Amendment) Regulations 2023 (which also comes into force on 1 January 2024), will ensure that key rights and principles in equality law are safeguarded so that the law will offer the same protection after the end of 2023 in relation to pregnancy, maternity and breastfeeding, indirect discrimination, access to employment and occupation, equal pay and the definition of a disability.  These protections would also otherwise have been lost at the end of 2023.

If you require any guidance in relation to the above changes, please contact a member of the AfterAthena team.

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[i] Department for Business and Trade & Kevin Hollinrake MP (2023) Government slashes up to £1bn a year of business burdens. Available at: https://www.gov.uk/government/news/government-slashes-up-to-1bn-a-year-of-business-burdens Accessed on: 8 November 2023.