Last year, the Retained EU Law (Revocation and Reform) Bill was announced, which provided that EU law would be automatically revoked on 31 December 2023 unless expressly retained. However, on 10 May it was announced that this sunset clause had been scrapped, and that current laws would remain binding unless expressly revoked. At Darwin Gray, we have explored the recent developments in connection with the Bill, and how these changes may affect employers.

A bonfire of employment rights?

When the Bill was initially introduced, concerns were raised regarding a ‘bonfire of employment rights’ as it was unclear what laws would be kept and which would be revoked. The change in position now means that several protections and frameworks will not disappear at the end of 2023, unless expressly removed.

What will likely change?

  1. Holiday calculation and pay

In the UK, employees have a statutory right to 5.6 weeks’ holiday entitlement each year. This includes four weeks’ holiday which is derived from the EU Working Time Directive and an additional 1.6 weeks’ which comes from UK domestic law.

There is complexity around how these two elements of holidays are treated.  Whilst the 4 weeks’ EU-derived holiday must be paid on all elements of a worker’s usual pay, (including overtime pay and commission), this does not extend to the further 1.6 weeks granted by UK domestic law. Therefore, employers currently have more flexibility when calculating pay for the additional 1.6 weeks. Different rules also apply to both holiday entitlements regarding the carrying over of holiday days into subsequent years.

The government have announced they are considering the merging of these two elements of holiday pay, but have not given any details how this may be done. It remains to be seen whether they will provide for more employee-friendly rights by extending the generous approach which applies to the four weeks’ EU-derived entitlement or implement more employer-friendly rights by extending the rules around the 1.6 weeks to apply to all statutory holidays.

Considerations have also been made to make changes to the ‘rolled up’ holiday pay. Rolled up holiday pay is a system where no holiday pay is paid when the worker takes their leave, but instead, an additional amount of pay is included in their pay for periods of work. This method of calculating holiday pay has been traditionally used for workers on zero hours contracts in the gig economy as the irregular work hours makes the calculation of holiday pay especially complex.

Under EU law, rolled up holiday pay is unlawful. The UK government are considering making rolled up holiday pay lawful in the UK, which would be welcomed by employers of workers who work irregular hours as it will significantly simplify the calculation of holiday pay.

  1. Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

Currently, under theTUPE Regulations, employers must inform and consult with representatives of employees affected by the transfer. However, it is likely that the requirement of consultation with appointed representatives is set to be removed where there are fewer than 50 employees in the business and fewer than 10 who are affected by the transfer. Rather, the employer would be able to consult directly with employees.

The government launched a consultation paper on the above proposed changes. The consultation closed in July and we are currently awaiting the government’s response. However, it remains to be seen whether these changes will be implemented and when they will take effect.