Earlier in the year, the government consulted on amending the Working Time Regulations to minimise record-keeping requirements, permit rolled-up holiday pay and change the way in which part-year and irregular hour workers accrue holiday entitlement. The government’s response to consultation confirms which proposals it will take forward.

At the same time, albeit with less fanfare, the government is legislating to preserve certain EU-derived employment rights that might otherwise have fallen away at the start of 2024 under the Retained EU Law (Revocation and Reform) Act.

What’s changing

The most significant changes to the Working Time Regulations will:

• Provide that irregular hours or part-year workers accrue annual leave on the basis of 12.07% of hours worked during each pay period, rounded up or down to the nearest hour. 
• Permit employers to adopt rolled-up holiday pay arrangements for irregular hours or part-year workers, by way of a 12.07% uplift to the worker’s remuneration.
• Amend record keeping requirements to provide that an employer is obliged to keep records that are adequate to show that it has complied with the rules on maximum weekly working time, night work and health assessments “in such manner and format as the employer reasonably thinks fit”. The Regulations will specifically state that an employer does not need to record each worker’s daily hours if it can demonstrate compliance in some other way.

A worker is an irregular hours worker if their paid hours during each pay period are wholly or mostly variable. Part-year workers are workers who are required to work only part of the year if there are periods within the year of at least a week where they are not required to work and not paid, although the terms of their contract continue to apply.

TUPE will also be amended to allow employers with fewer than 50 employees, or employers of any size involved in a transfer involving fewer than 10 employees, to inform and consult employees about the transfer on an individual basis if there are no appropriate representatives in place.

And what isn't

Holiday carry forward and pay

The Working Time Regulations will be amended to codify CJEU case law that might otherwise have ceased to apply.

• Workers who cannot take annual leave in the year it accrues because they have taken statutory leave (maternity leave or other family leave provided for in the Employment Rights Act 1996) will have an express right to carry unused leave forward to the following leave year. 
• Workers who cannot take annual leave in the year it accrues because they have taken sick leave will have an express right to carry unused basic leave forward to the following leave year and must take it in any event within 18 months of the end of the leave year in which it accrued.
• Workers can also carry untaken leave forward if an employer a) does not recognise their right to leave (for example because they do not regard someone as a worker), b) does not give them a reasonable opportunity to take their leave or c) does not warn the worker of the “use it or lose it” principle where there are no grounds for carrying leave forward. In these cases leave can be carried forward until the end of the first full leave year in which workers are afforded their opportunity to take leave.
• When calculating pay for basic holiday, employers much include payments intrinsically linked to the performance of a worker’s tasks (such as commission payments), payments relating to length of service, seniority or professional qualifications, and other payments (such as overtime) that have been paid regularly to the worker in the 52 weeks before the calculation date.

Amendments to the Equality Act

The government is also amending the Equality Act to enshrine some aspects of CJEU case law in domestic law. 

In relation to pregnancy and maternity discrimination, amongst other things the Act will expressly provide that unfavourable treatment after the protected period is unlawful if it is related to pregnancy or pregnancy related illness during the protected period.

More significantly, the Equality Act will prohibit indirect discrimination by association. This will allow those who are disadvantaged by a provision, criterion or practice that puts those who share a protected characteristic at a particular disadvantage to bring an indirect discrimination claim, even if the claimant does not share the relevant characteristic. The normal objective justification defence will still apply. Tribunals have been grappling with whether they can interpret the Equality Act to give effect to EU law in this respect, and the amendment clarifies the position.

It will be unlawful to make a discriminatory statement in connection with recruitment. A discriminatory statement is one that is directed to the public that would amount to direct discrimination if it were made in connection with a specific recruitment decision (such as a statement that an employer would not recruit people with a particular protected characteristic). The EHRC can take enforcement action if an employer makes such a statement.

The equal pay provisions of the Equality Act will expressly allow someone to compare themselves with a comparator where there is a single body responsible for setting the terms on which the complainant and the comparator are employed that is in a position to ensure equal treatment. This reflects the “single source” approach under Article 157 of the Treaty on the Functioning of the European Union, which will no longer have direct effect after the end of 2023.

Finally, the definition of disability is being amended to make it clear that “normal day to day activities” include references to someone’s ability to participate fully and effectively in working life on an equal basis with other workers, reflecting the approach to disability adopted by the CJEU.

Next steps

Both sets of amending regulations will come into force on 1 January 2024. This ensures that there will be no gap in protection as a result of the Retained EU Law (Revocation and Reform) Act.