On 8 November 2023 the government finally responded to its consultation on reforms to the Working Time Regulations 1998, and at the same time published draft regulations which have been laid before Parliament. The proposed date for introduction of these changes is remarkably soon as 1 January 2024.

These changes for 2024 represent arguably the most significant legislative changes to worker holiday rules for 25 years.

The draft Regulations introducing these changes can be found here: https://www.legislation.gov.uk/ukdsi/2023/9780348253269

The most significant changes are:

  1. Statutory clarification/codification of what should be included in holiday pay for the purposes of 4 weeks of the 5.6 weeks’ statutory minimum leave. This will be anything already included in the existing statutory definition of a “week’s payplus:
  • Payments, including commission, 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.
  • Payments, including overtime payments, which have been regularly paid to a worker in the previous 52 weeks.

This does also mean that there will continue to be a confusing difference in holiday pay treatment for 4 weeks of the 5.6-week minimum leave entitlement (often called EU or regulation 13 leave) vs the remaining 1.6 weeks’ leave (often referred to as domestic or regulation 13A leave).  The government has unfortunately elected not to remove this distinction.

  1. Two new categories of worker for the purposes of holiday rules titled ‘irregular hours’ and ‘part year’ workers with a new set of rules applying to these new categories of worker, new regulations 15B to 15F, which will provide:
  • A new holiday entitlement under regulation 15B, whereby holiday accrues based on 12.07% of the hours worked in the previous pay period. This largely clarifies the confusing position that has arisen since the Supreme Court case of Brazel.

and

  • A right for employers, if they choose, to implement a system of rolled-up holiday pay, where holiday pay for regulation 15B holiday is paid as an uplift of 12.07% to the normal rate of pay at the time work is done, instead of being paid at the time holiday is taken. This is a huge step, since this method of awarding holiday pay was deemed contrary to EU law in 2006.

These specific new regulations at 15B to 15F will only apply to irregular hours and part-year workers, and only in relation to leave years which start on or after 1 January 2024.

A worker is an irregular hours’ worker, in relation to a leave year, if, under the terms of their contract, the number of paid hours that they will work in each pay period during the term of their contract in that year is wholly or mostly variable.

A worker is a part-year worker, in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid. Periods of sick leave or statutory leave (such as maternity leave) are ignored.

 

Many businesses, particular those with casual and term-time workers, will be impacted by these changes, and we are currently analysing the just published draft Regulations.

I propose to run a 2 hour webinar on the topic on 24 January 2024 from midday.  Please send me an email to katelawson@elementlaw.co.uk if you would like to attend.

Please do let me know if you require specific advice on these changes and how they may impact your business.

Kate Lawson