Holiday Entitlement, Holiday Pay, Rolled-Up Holiday Pay and TUPE

In October 2022 the Government introduced a bill which, if passed would have the effect of repealing all legacy EU legislation on 31st December 2023, unless it had been replaced with UK legislation restating or amending the existing provisions. 

Many employment law commentators felt that this would be an opportunity for some changes to the law surrounding holiday entitlement, holiday pay and TUPE now that we are not bound by EU legislation and judgements in the European Court of Justice.

The above bill was dropped earlier this year but the Government has this week confirmed its position that there will be no changes to holiday entitlement and holiday pay going forwards and the existing provision and case law will remain.

This means that the minimum holiday entitlement in the UK will remain as 5.6 weeks, made up of 4.0 weeks of Section 13 leave and 1.6 weeks of Section 13A leave; for someone working a standard five day week, this equates to 28.0 days in total (to include public holidays), made up of 20.0 days of Section 13 leave (and 8.0 days of Section 13A leave.

The first 4 weeks of leave in any holiday year, to include any public holidays that fall within it will be deemed Section 13 leave, the remainder of the 5.6 weeks will be Section 13A leave; anything above 5.6 weeks afforded by the employment contract will be treated as an extension to Section 13A leave.

Section 13 leave MUST be paid at the average of the employee’s ‘normal’ earnings in the 52 weeks leaving up to the period of leave; that is to say it should include any payments the employee has received in respect of overtime (whether voluntary or compulsory, regular or irregular), commission, individual or team performance related bonuses, and any allowances (such as shift allowance) but excluding company bonus payments.

Section 13A leave can be paid at the employees basic salary only.

Employers who are still paying basic salary only for all holiday leave are exposed to claims by their employees for up to two years of underpaid holidays for the first 4.0 weeks of leave per year.

Any Section 13 leave that cannot be taken due to illness or reasons other than family related leave (maternity leave, shared parental leave etc.) carries forward to the next holiday year, to be taken within 18 months; Section 13A leave does not carry forward unless the employer expressly agrees to this. Where leave cannot be taken for family related reasons, Section 13 and Section 13A leave carries forward.

There is a change to the rolling up of holiday pay for casual workers, which was made illegal a number of years ago. The recent announcement has said that this will soon be possible providing the holiday pay element is shown clearly on the worker’s payslip; the new rules on rolled up holiday pay start from the beginning of the first holiday year after the beginning of April 2024 (if the holiday year runs from January to December, this will take effect from January 2025). This does not apply to employees, who must still take their allotted holidays and paid as outlined above.

One final change announced in the Government’s statement was that, from January 2024, small businesses (of less than 50 employees) doing TUPE transfers of any size and larger companies that are doing small TUPE transfers (of fewer than ten employees) will no longer need to consult with elected representatives where none exist; consultation will be with individual employees.

For more information on this or any other issue, please give us a call.