Changes to Employment rights from January 2024 to Holiday pay
Regulations will introduce changes covering holiday pay, working time and TUPE
The UK government is set to reintroduce 'rolled-up' holiday pay, a method of payment for holiday leave, specifically for workers with irregular hours or those who work only part of the year, such as seasonal workers. This method was previously common for workers without contractual or regular hours, including those on 'atypical contracts' like zero hours contracts, but was deemed unlawful. However, in an effort to simplify holiday pay laws, this practice will be legal again from April 1, 2024, for the aforementioned categories of workers.
Holiday pay for irregular hours and part-year workers.
Additionally, following the Supreme Court Judgment in Harper Trust vs Brazel in 2022, changes are being made to how annual leave accrual is calculated for part-year and irregular hours workers.
Previously, the 12.07% method used for this purpose was removed, leading to these workers potentially receiving more holiday pay than their counterparts with year-round, contractual hours. The government faced significant backlash over this discrepancy and announced a consultation on its use. As a result, starting next year, the 12.07% method will be reinstated as a way to calculate leave for those working irregular patterns or for part of the year.
For businesses, there are also important updates in terms of compliance and regulations:
Working Time Records:
The requirement to keep a separate record of daily working time for all staff will be abolished. However, businesses must still maintain records of working time to ensure compliance with Working Time and minimum wage regulations.
TUPE (Transfer of Undertakings (Protection of Employment)) Changes:
TUPE occurs when a business or part of it transfers from one employer to another, including sales, takeovers, or service/contract transfers. Under TUPE, employers are typically required to consult with the workforce and inform them of their right to elect employee representatives, especially in cases without trade union recognition. This process can be burdensome for smaller businesses. Therefore, from the new year, small businesses (with fewer than 50 employees) or TUPE transfers involving fewer than 10 employees will be allowed to consult with affected staff individually, simplifying the process.
These changes, particularly the reintroduction of rolled-up holiday pay and the adjustments to the TUPE process, are significant for both employers and employees, especially those in atypical employment contracts.