UK: working time and equality law changes in force from 1 January; new government guidance published

Regulations amending the Working Time Regulations, TUPE and the Equality Act, codifying and clarifying EU-derived rights following the Retained EU Law (Revocation and Reform) Act 2023, were approved by Parliament on 19th December 2023 (without changes to the draft text) and came into force on 1 January 2024. The changes to the Equality Act are as set out in our earlier post here, and those to the Working Time Regulations and TUPE are discussed here.

As promised, the Government also published guidance on the working time changes on 1 January, including updated general guidance on holiday entitlement, here, and new guidance mainly dealing with casual workers' rights, here. These clarify the Government's intention in relation to some of the queries arising from the regulations, although of course tribunals could decide on a different interpretation, and many queries remain unaddressed.

The guidance touches on some of the uncertainty in the new rules on statutory holiday for irregular hours and part-year workers (which apply for leave years beginning on or after 1 April 2024):

• According to examples given in the guidance, the definition of irregular hours worker (where the contract provides that the number of paid hours to be worked in each pay period will be 'wholly or mostly variable') will clearly cover those on zero-hours contracts, but is not intended to cover those with hours fixed by their contract but which are different for different weeks within the pay period, for example on a rotating shift pattern.
• The guidance also states that an individual will not be a part-year worker (which requires there to be at least one week of the year when they are not required to work 'and for which they are not paid') if they work part-year, eg term-time only, but are paid an annualised flat salary.  (The contrary argument is that such workers should be covered given there are non term-time weeks which are both unworked and unpaid for, and the payments received outside of term-time are actually for work done during terms.)
• The amended regulations provide that the maximum amount of leave that can be accrued is 28 days, but do not specify how to incorporate this where daily hours of work vary.  The guidance states that the Government considers it 'appropriate' to incorporate the cap by converting the cap to hours, using the individual's average number of daily hours.

Employers with atypical workers who may be covered by the new rules will need to give them careful consideration and potentially take advice before adjusting contracts and policies.

The updated general guidance also sets out the new rules on holiday carry over (see our blog post) and the requirement to pay normal pay for the first 4 weeks' leave for all workers (and also for the additional 1.6 weeks' leave for irregular hours and part-year workers). This includes payments which are intrinsically linked to the performance of contractual tasks, payments related to length of service or professional qualifications, and "payments, such as overtime payments, paid regularly in the last 52 weeks". The intention appears to be to codify existing law, but the drafting could arguably go further (for example, could annual bonuses which are not linked to performance still be included as 'regular' payments?) and in any event raises workers' awareness of potential claims. Unfortunately the guidance does not discuss this in any detail, simply stating that the intention is to ensure workers receive the same holiday pay as the pay they would receive if at work and working (in the new guidance) and that normal pay "does not usually include bonus payments" (in the updated general guidance).

Employers may need to check that they include the required elements of pay in their holiday pay both during employment and in lieu on termination of employment.  Those operating bonus schemes should consider their level of exposure and response to the risk of claims.  Relevant factors will include whether the bonus is intrinsically linked to performance, the regularity of payment and whether taking statutory holiday potentially reduces the amount of bonus.

Employers should also check their holiday policies and procedures reflect the carry-over rules;  it is important that workers are encouraged to take their statutory entitlement and informed if they have untaken entitlement that will be lost at the end of the leave year, otherwise they may be entitled to carry it over.