Holiday Pay
17/11/2023
The issue of holiday and holiday pay continues to gather momentum following the recent Supreme Court Judgment of Chief Constable of PSNI v Agnew. Mr Noel Kelly, the Northern Ireland President of Tribunal met with the Tribunal User Group on 6 November 2023 to discuss the way forward. With thousands of pending Tribunal claims, Mr Kelly strongly encouraged the parties to take a very practical approach.
Then, on 8 November 2023, the UK Government published its Response Government Response to the Consultation on reforms to retained EU employment law and the consultation on calculating holiday entitlement for part-year and irregular hours workers.
This is the Response to two Consultations covering holiday pay (and TUPE not covered in this article). The Response considers:
1. Calculating holiday pay for part year, irregular workers (following the Supreme Court’s decision of Harper Trust v Brazel that held the use of the accrual formula of 12.07% did not provide part-year workers with their correct leave entitlement under the Working Time Regulations); and
2. Simplifying rules around working time, record keeping and holiday pay.
In its announcement, the Government said that it is removing obsolete and burdensome EU rules from UK law that could save British businesses up to £1 billion a year.
Whilst these changes will only apply to Great Britain (as employment law is devolved in Northern Ireland), they could help shape what happens here if the Executive was restored. Indeed, there are increasing calls for the Executive to get back to sort out the huge costs of all pending holiday pay claims to the public purse following the Agnew Judgment.
In Summary, laws will be introduced to reform to record keeping requirements under the Working Time Regulations and provisions for annual leave and holiday pay calculations in the Working Time Regulations.
The Response confirms:
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Distinction between the different types of holidays, i.e. 4 weeks’ Working Time Directive leave (Regulation13) and 1.6 weeks’ Working Time Regulation leave (Regulation13A), will remain and the proposal to create a single pot will not be taken forward.
2. The use of the accrual formula of 12.07% (that Harper had found breached the Working Time Regulations) will be made lawful for part-year, irregular workers.
3. Rolled up holiday pay will be made lawful for irregular and part-year workers only.
4. Rules regarding carry over of holiday following family-related leave absence and sickness will be kept, essentially codifying into law the existing case law.
- Simplification of record keeping rules to keep adequate records, but not necessarily a full record of all daily working hours.
- Guidance will be provided on what is normal remuneration (to include, for example, commission and regular overtime) and what amounts to irregular hours.
Shortly after the announcement, the Government published the draft new laws The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 which provide more detail about the changes and confirmed that they will come into force on 1 January 2024.
Commentary
These changes will be welcome by Organisations as they will reduce the administrative burden on businesses. The reinstatement of the 12.07% accrual formula will also be welcome as it was considered unjust that those working irregular or part-year were treated more favourably than other workers.