The Government has recently published the draft of The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 and The Equality Act 2010 (Amendment) Regulations 2023. These drafts give us a good idea of how Employment Law will look after the Retained UK Law (Revocation and Reform) Act 2023 removes our ties to EU law on 31 December 2023. The purpose of these Regulations is to codify specific employment protections which the Government wishes to remain as part of UK law, but without any intervention would cease to have any influence on the UK Courts once the interpretive effects of EU law are removed from UK statutes.
The statutory changes in these Regulations will come into force on 1 January 2024 unless stated otherwise.
Changes under The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023
Rolled up holiday pay
Rolled up holiday pay is where a worker is paid their holiday entitlement by way of an uplift to their normal salary at the time that the holiday is accrued and not when it is taken. Therefore, when the worker uses their holiday entitlement by taking a day off as holiday they will not be paid for that day as they would have already received payment for that time already with their salary. This practice was widely used until it was found to be non-compliant with EU law. These Regulations reintroduce this as an accepted practice for irregular hours workers and part-year workers. This practice should not be used for workers who have regular working hours.
Under these regulations, businesses will be allowed to use rolled up holiday pay using the 12.07% calculation method for workers who do not work regular hours. This will make it easier for employers to calculate holiday pay and avoids the result of Harpur Trust v Brazel, which in some cases entitled a part-year worker to higher holiday pay than a worker who worked the same number of hours over the entire year.
If you have any questions regarding how to calculate holiday pay in light of these new regulations, please do not hesitate to contact us for advice.
Revocation of The Working Time (Coronavirus) (Amendment) Regulations 2020
On 31 March 2024, The Working Time (Coronavirus) (Amendment) Regulations 2020 which allowed holiday entitlements to roll over for two years in specific circumstances (related to COVID-19) will be revoked.
Restating rights that originate from EU law
To avoid any legal uncertainty as we move further away from EU derived law, the Government has confirmed in this regulation that the UK will continue to use the same interpretation of the Working Time Regulations 1998 via EU case law when it comes to the right to carry over holiday and the definition of normal pay. However, this Regulation will take over as the legal authority on these matters.
For completeness we will confirm the correct position on these topics below:
Carrying over leave
Workers will continue to be allowed to carry over any unused holiday entitlement to the following year, if the reason for not taking the leave is the following:
- Family related leave (for example Maternity or Paternity leave) or,
- Sick leave (4 weeks leave over a period of 18 months) or,
- Where a worker has not been given the opportunity to take their leave or the employer has failed to inform them that any leave not taken cannot be carried over and if not taken will be lost.
Normal remuneration
The Working Time Regulations 1998 refers to the worker being entitled to a week’s pay in respect of each week of leave. This has been subject to an interpretation under EU law that holiday pay is based on pay that is normally received which must include:
- Payments linked to the performance of tasks which the worker carries out under their contract of employment, including compulsory or recurring overtime.
- Payments which relate to the workers professional and personal status.
- An amount to reflect contractual results-based commission that a worker ordinarily receives.
Removing working time record keeping requirements
From 1 January 2024, employers will no longer be required to keep daily records of a worker’s working hours and the way records are kept will be left to the reasonable discretion of the employer as long as it can demonstrate that it is in compliance with working time limits set by The Working Time Regulations 1998.
Rules on consulting for smaller businesses in relation to a TUPE transfer
Under this Regulation the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations) are amended to allow the employer to directly inform and consult employees about a relevant transfer if the business has fewer than 50 employees or where there are fewer than 10 employees subject to the transfer (regardless of the size of the employer), provided there are no existing appropriate representatives (e.g. a trade union).
This amendment will apply to TUPE transfers which take place on or after 1 July 2024.
Changes under The Equality Act 2010 (Amendment) Regulations 2023
Indirect discrimination by association
These Regulations introduce indirect discrimination by association as a type of discrimination claim, which has not been referred to in the Equality Act previously but there have been cases within the EU jurisdiction that have successfully argued this type of claim.
Indirect discrimination by association is a type of claim which could arise if there are specific rules, policies or a physical feature in place at the workplace which places someone at the same disadvantage as someone they are associated because of a relevant protected characteristic.
Definition of disability
These Regulations insert into the definition of disability in the Equality Act that a person’s day-to-day activities would include their ability to participate fully and effectively in working life on an equal basis with other non-disabled workers as part of normal day-to-day activities.
Equal Pay
These Regulations codify the principle of a “single source” for the purposes of establishing an equal pay claim. This means that a comparison can be made between workers in the same establishment or service where the terms and condition are dictated by the same entity. This principle has often been used against supermarket chains where the relevant individuals work in different areas of the business but in a comparable role. The principle is derived from a judgment from the European Courts of Justice which is why it needed to be codified in a domestic statute for the principle to remain part of UK law.
Access to employment
Under these Regulations protection from discrimination is extended to include comments made about not wanting to recruit people who share a particular protected characteristic even when the employer may not be actively seeking to recruit anyone or an identifiable victim.
Pregnancy and maternity
These regulations also codify that an employer cannot discriminate an employee because they are breast feeding. This is because these Regulations protect breastfeeding under the protected characteristic of sex.
It is also suggested that women will be protected from pregnancy and maternity discrimination or discrimination which can be attributed to a pregnancy related illness, even after they have returned from maternity leave if the discrimination can be attributed to the pregnancy or pregnancy related illness. We will provide an update on this if it becomes law and once more guidance on this has been released.