So, which EU retained employment law regulations are likely to make the list?
Three sets of regulations will almost certainly make the list: the Posted Workers (Enforcement of Employment Rights) Regulations 2016, the Posted Workers (Agency Workers) Regulations 2020, and the European Co-operative Society (Involvement of Employees) Regulations 2006. As the UK is no longer an EU member state, the concept of a "posted worker" does not apply as it did during our membership of the EU. The third set of regulations relates to an entity known as the European cooperative society, for which the regulations governing them were revoked at the end of the Brexit implementation period. The Government therefore sees the inclusion of these three sets of regulations as simply a tidying up exercise.
But the Government is also proposing amendments to core employment law regulations including the Working Time Regulations and the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).
As part of the Government's review, the Department for Business & Trade has identified three main areas where it sees opportunities for improvements in relation to retained EU employment law regulations, namely:
- the process for record keeping under the Working Time Regulations; ("WTR")
- reducing the complexity of annual leave and holiday pay calculations under the WTR; and
- consultation requirements under the Transfer of Undertakings (Protection of Employment) Regulations ("TUPE").
Last Friday, the Department for Business & Trade launched a consultation on the changes that it proposes to implement in relation to each of the three areas identified above, and has sought feedback on its proposals.
The Department for Business & Trade has confirmed that it wants to 'use this consultation as part of our ongoing dialogue with businesses and workers to set out an employment rights framework that will allow the UK labour market economy to grow and retain our global position as a dynamic, vibrant and flexible economy'.
Record keeping under the WTR:
Since the UK's exit from the EU, the Government has reviewed the strict requirements that employers are subjected to in relation to their record keeping obligations under the WTR, to assess whether they support the Government's objective of stimulating growth within the UK economy.
Whilst the Government intends to preserve the majority of the rights under the WTR in domestic law, including (but not limited to) the regulations around uninterrupted rest periods, the maximum average 48 hour working week (measured over a reference period of 17 weeks) and an annual leave entitlement of 5.6 weeks, it proposes to address the uncertainty for employers concerning their record keeping obligations.
Following a 2019 Judgment of the Court of Justice of the European Union (Federación de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE), it was ruled that employers must have a system in place that enables them to measure the duration of time worked by each worker each day. However, the UK Government proposes to clarify that this requirement does not apply to UK businesses on the basis that, it is unfair, particularly in the aftermath of COVID to expect businesses to incur high costs in implementing a new record keeping system, and that the requirement does not give workers any new substantive rights to which they aren’t already entitled.
Holiday pay and entitlement reform:
Single leave entitlement of 5.6 weeks:
The first change that the Government is proposing to make is in relation to holiday leave entitlement. Currently, under the WTR, Regulation 13 provides a worker with the right to 4 weeks annual leave which is in relation to the leave required by the EU's Working Time Directive, whilst Regulation 13A provides an additional 1.6 weeks of annual leave which is above the EU minimum requirements. The two separate entitlements currently create confusion and an administrative burden for employers, as different rules, including whether holiday can be carried forward into the next year and how holiday pay should be calculated, differ under each entitlement.
In order to address the confusion, the Government is proposing to create one set of annual leave for all workers in the UK, which will be governed by one set of rules. The amount of annual leave will remain at 5.6 weeks and workers will still be able to carry over 1.6 weeks of annual leave into the following year provided there is a written agreement between a worker and their employer. In terms of how holiday pay should be calculated, the Government is proposing for all statutory holiday to be calculated using the same method, and is seeking views from employers and workers on what they think this ought to be.
Calculating leave in a worker's first year of employment:
Under Regulation 15A of the WTR, annual leave entitlement is accrued at a rate of 1/12th each month until the end of a worker's first year of employment. This contradicts Regulations 13 and 13A of the WTR which govern how to pro-rate an employee's annual leave entitlement if they start mid-way through a holiday year.
The Government intends to address this confusion by proposing that workers accrue their annual leave entitlement at the end of each pay period until the end of their first year of employment, and the Government intends to introduce regulations which will set out a clear method for calculating holiday entitlement to avoid any confusion.
'Rolled-Up' Holiday Pay:
The Government is also consulting on introducing 'rolled-up' holiday pay as an option for all workers. Rolled-up holiday pay is where an employer pays an additional amount on top of the worker's normal hourly rate of pay, with the additional amount intended to represent holiday pay. This means that the worker does not receive additional pay when they take their holiday entitlement.
If employers choose to implement rolled-up holiday pay, the Government proposes that it is paid at a rate of 12.07%, as this is the proportion of statutory annual leave in relation to the working weeks of each year. The Government has flagged that this amount would have to be clearly identified on a worker's payslip as being their holiday pay.
Currently, in advance of a TUPE transfer, the current employer and the new employer are required to inform and consult with the affected workforce. For those businesses with fewer than ten employees, the consultation can take place with the employees directly if there are no existing appropriate representatives in place. However, for larger businesses, the employer is required to arrange elections for the affected employees to elect new employee representatives if they are not already in place, even if the transfer only involves two employees.
In order to reduce the burden placed on businesses, the Government is proposing to allow small businesses (businesses with less than 50 employees) and all sizes of businesses where a transfer of a small number of employees is proposed (fewer than 10 employees) to consult with employees directly, provided that there are no existing employee representatives in place. Businesses with 50 or more employees will still be required to arrange elections for worker representatives if they are not already in place, unless the transfer of employees involves fewer than 10 employees.
The Government has confirmed that the proposals set out above to do not intend to remove rights for workers but instead 'remove unnecessary bureaucracy in the way those rights operate'. It is likely that these proposals will come as welcoming news for businesses.
If you would like to respond to the Government's proposals, or read the consultation in full, all of the relevant details can be found here.
If you would like to discuss the consultation in further detail, please do not hesitate to contact your usual contact in EPIC, or any other member of the EPIC team.
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