The Retained EU Employment Law: What does it mean for employers

On 8th November the Department for Business & Trade published the government’s response “to the consultation on reforms to retained EU Employment law, and the consultation of calculating holiday entitlement for partyear and irregular hours workers”. Read the response here.

There are three key headline responses to the consultation.

• The government has decided not to move forward with the idea of implementing a 52-week holiday entitlement reference period. Instead, for irregular hours or part-year workers, holiday entitlement will now be calculated as 12.07% of the hours worked in a given pay period.
• The current holiday pay rates, as outlined in both Regulation 13 and Regulation 13A, will be preserved. There will be no consolidation into a single annual leave entitlement. Consequently, workers will persist in
  receiving 4 weeks at their normal rate of pay and 1.6 weeks at their basic rate of pay.
• Rolled-up holiday pay is permissible, but exclusively for individuals with irregular hours or part-year workers.

We need to await additional guidance and documentation from the government to understand how this will be implemented in practice.

The return to the use of the 12.07% may well be a welcome one for administrative ease. In practice, however, for the time being you should continue to retain working hours records for all employees to ensure that holiday calculations can be completed based on a 52-week reference period and NOT calculated at 12.07%. If you are still calculating holiday pay for employees in this way and not using the 52-week reference period, then you are potentially at risk of Employment Tribunal for unlawful deduction of wages. HR Solutions at MHA could advise you on managing holiday calculations required for additional hours worked, commission and bonus payments.

HR Solutions at MHA could advise you on managing holiday calculations required for additional hours worked, commission and bonus payments.