Amendments to Working Time Regulations and TUPE from January 2024

At a glance

• Government response to consultations on proposed amendments to Working Time Regulations and TUPE published.
• The changes proposed are due to come into force 1 January 2024.

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Background

The government launched a consultation on retained EU law in May 2023 and a consultation on calculating holiday entitlement for part-year and irregular hours workers in January 2023. The government has now published its response to both consultations.

Working time record-keeping obligations

In 2019 the European Court of Justice (ECJ) held in CCOO v Deutsche Bank that objective, reliable and accessible records need to be kept in relation to the right to minimum daily rest breaks, weekly rest periods, and the limit on the maximum weekly working time, rather than simply adequate, proportionate records as required by the Working Time Regulations (WTR). This did not implement any change to UK law but the government has decided to remove the effects of the CCOO judgment to remove any risk that the current record keeping requirements may change.

Holiday entitlement and pay

The retained EU law consultation sought views on a proposal to consolidate the four weeks of 'Directive' leave and 1.6 weeks’ ‘additional’ leave under the WTR into one 5.6 week entitlement.

The government has decided not to introduce the single annual leave entitlement, but to maintain the two distinct pots so that workers continue to receive four weeks at normal pay and 1.6 weeks at basic pay. However, legislation will clarify what counts 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; and
• Payments such as overtime which have been regularly paid to a worker in the previous 52 weeks.

The separate consultation on calculating holiday entitlement for part-year and irregular hours workers sought views on changing the calculation of entitlement to either an average over a 52-week reference period, or an accrual method of 12.07% of hours worked. The government has decided to implement the accrual method for calculating holiday entitlement for irregular hours and part-year workers so that these workers will accrue holiday at 12.07% of hours worked over the preceding pay period.

The government will also introduce rolled-up holiday pay for irregular hours and part-year workers only, but employers who choose to use rolled-up holiday pay will be required to calculate it based on a worker’s total earnings in a pay period.

The government will also legislate to restate certain ECJ judgments to retain workers entitlement to carry over leave when a worker is unable to take their leave due to being on maternity / family related leave or sick leave.

TUPE

The government will proceed with the planned reforms to the TUPE consultation requirements to allow small businesses (fewer than 50 employees) and businesses of any size undertaking a transfer of fewer than ten employees to consult directly with their employees if there are no existing worker representatives.

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.

Takeaways

The proposed changes should reduce some of the complexity and uncertainty around holiday pay and provide greater clarity on the continued impact of existing ECJ case law on the UK holiday pay regime. The amendments to TUPE, whilst modest in scope, will provide greater flexibility for employers.