The UK government is keen to use its post-Brexit flexibility to reduce bureaucracy without reducing workers’ rights.

The Retained EU Employment Law consultation paper confirms that the majority of employment legislation will be preserved in its existing form, including rights to maternity and other family leave and protections for part-time and agency workers and fixed term employees. It contains further details of some aspects of retained EU law where the government is proposing to make changes, in the areas of working time and TUPE.

Working time

Three elements of the Working Time Regulations will be reformed.

Record keeping requirements

In 2019 the CJEU held that, under the Working Time Directive, employers are required to record workers’ daily working hours. This was more onerous than the position under the Working Time Regulations, which broadly only require employers to keep records showing that they are complying with maximum weekly working time and night work limits.

The government believes that the CJEU requirements are disproportionate and will legislate to make it clear that employers are not required to record daily working hours.

Single annual leave entitlement

Currently, workers are entitled to four weeks’ “basic” annual leave and a further 1.6 weeks’ “additional” annual leave. The government is proposing to introduce a single composite annual leave entitlement of 5.6 weeks, with a single rate of pay. At the moment, following CJEU decisions, employers have to calculate holiday pay for the basic leave entitlement on the basis of a worker’s normal pay. Additional holiday pay can reflect a worker’s basic pay.

Legislation will specify how holiday pay for the new composite leave entitlement should be calculated. The government is asking for views on whether holiday pay should reflect a worker’s normal pay, basic pay, or some other rate.

The government is not intending to allow employers to pay in lieu of holiday, other than on termination of employment, or to increase the amount of holiday that employees can carry forward to subsequent leave years. Revised regulations will clarify how to calculate holiday entitlement for someone during their first year of employment.

Rolled-up holiday pay

As a matter of EU law, employers are not permitted to pay rolled-up holiday pay. The government is proposing to permit rolled-up holiday pay in future, which will simplify calculating holiday for casual and gig-economy employees in particular.

If the proposals go ahead, employers will be able to pay rolled up holiday pay calculated as 12.07% of a worker’s actual pay in each pay period (or a higher percentage if necessary to reflect any contractual leave over and above the statutory holiday entitlement). The worker would not be entitled to pay during any periods taken as annual leave.

TUPE

The proposed amendments to TUPE are less significant but will be of some benefit to small employers, or in situations where very small numbers of employees are transferring. At the moment, except in the case of micro-employers, employers have to elect employee representatives with which to inform and consult on a TUPE transfer if they do not already have employee representatives, such as a recognised trade union.

In future, the government suggests that employers with fewer than 50 employees will not have to elect representatives. They will be able to consult direct with employees on a TUPE transfer if there are no existing employee representatives. This will also be the case, regardless of the employer’s size, if fewer than 10 employees are being transferred. However, if employers already have employee representatives in place, they must consult those representatives and will not be able to consult directly with staff.

Next steps

The consultation closes on 7 July 2023.

Authored by Jo Broadbent, Katharine Savage and Stefan Martin.