Retained EU Law (Revocation and Reform) Bill – proposed changes - Part 2

In the second part in this series, we take a look at the possible changes that could be made to improve the Working Time Regulations 1998 (WTR) and the Agency Worker Regulations 2010.

Working Time Regulations - 48-hour week

The WTR derive from the EU Council’s Directive on working time (1993) and the Council Directive on the protection of young people (1994).  

The WTR, at least as far as time off from work and working limits were concerned, was seen as a piece of health and safety law with the role of enforcer falling onto the Health and Safety Executive. Consequently, the ability of any individual to seek redress against their employer for exceeding the 48-hour week was, and remains, very limited.  This must be an area which is ripe for reform. 

Wish List Item

The 48-hour working week was a good idea in principle but the ability for employees to opt out has made it something of a damp squib.  Combine that with the inability of an employee to enforce their right in the employment tribunal and the principle is essentially worthless. 

The options are numerous, and their respective adoption will greatly depend on the government’s desire for legislation in the workplace:

1. Remove the limit altogether without further change to this part of the WTR;
2. Remove the limit but provide greater powers for employees to enforce their remaining rights within the employment tribunal;
3. Maintain the limit and give enforcement rights to the employment tribunal;
4. Remove the limit save to specific (more limited) sectors or to employers with more than a specific number of employees.

Working Time Regulations - Annual leave and pay

Alongside the maximum working week, most people will recognise the WTR for introducing the right to a minimum amount of paid annual leave, originally 20 days (under the Directive) and latterly 28 days (UK only under the WTR).  At this point we should stress that given the UK has extended the limit of statutory annual leave in the UK, it is highly unlikely that this right will be withdrawn as part of the ‘sunset’ provisions of the Bill.  While determining the amount of leave to which an employee is entitled is relatively straightforward, developments over the past few years have meant that the same cannot be said for the amount that is to be paid to an employee when taking annual leave.

The WTR stipulates that an employee should receive a week’s pay for every week of annual leave that is taken and directs us back to the Employment Rights Act 1996 for the definition.  All good so far.  The landscape was however changed with the various headline cases which stated that normal remuneration should be paid during holiday, taking into account payments like commission and, in particular circumstances, overtime. This is probably the biggest area of concern for employers; the courts have identified the principle but have refused to confirm exactly what employers need to do to comply and have also refused to clarify what generates a pattern of work which would trigger payments above basic salary during periods of holiday.  We therefore have our second area for reform.

Wish List item

Clarity in this area is much overdue so that employers and employees have a clear idea of their obligations and rights accordingly.  Some options to consider:

1. Calculate the average days’ pay for an employee through the use of all payments made to them for the previous holiday year and ensure that this rate is applied, as a minimum, to each day of annual leave taken in the subsequent holiday year;
2. As above but apply the 12 months on a rolling basis immediately preceding the date of the leave;
3. Only overtime which generates an additional [x]% of employee’s salary in the previous pay period should be taken into account for holiday pay and then adopt a method such as 1) or 2) for such calculation;
4. Revert to the original position and only apply basic salary to annual leave.

Working Time Regulations – Holiday carry over

Our third and final area of focus is to consider the question of carry-over of annual leave.  The original Council Directive did not permit the carry-over of annual leave, but that position has been amended through case law to confirm that leave which cannot be taken as a consequence of sickness or other leave (e.g. maternity) can be carried over into the subsequent leave year.  The WTR permitted the carry-over of the additional leave (8 days) which was granted above the WTD minimum.

While the delay of annual leave due to maternity leave is understandable and clear, many do still not properly understand the provisions that are available when on sick leave.  Unlike maternity leave, an employee who is on sick leave is entitled to take holiday and be paid for it at the appropriate rate (whatever that is!) while also certified as unfit for work.  An employee who is scheduled to be on leave but who is then taken ill is able to cancel that leave, have it reinstated and take the same time as sickness absence.  Is such a convoluted approach necessary? 

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What are the alternatives?

1. Revert to the WTD position and not allow any leave to be carried forward from one year to another;
2. Permit carry-over at any level agreed between the employee and employer;
3. Permit annual leave to be carried over but also permit such ‘additional’ leave to be paid in lieu during employment;
4. Clarify that annual leave and all other types of leave are mutually exclusive and accept that accrual and subsequent carry over is inevitable.

Agency Worker Regulations 2010

We turn to the final item on our list.  There are of course other pieces of legislation that could be considered – it is said that the Bill will have relevance to around 380 items that fall within the ambit of the Department for Business, Energy and Industrial Strategy alone – but those we have identified typically apply more than some others.

In a post-Brexit world where levels of employment are higher than ever before and, anecdotally, we understand that many people want to work within the temporary/agency worker sector, do we really need the AWR at all?  This is particularly so given the AWR are themselves slightly confusing.  On the one hand we have rights that are said to apply from day 1 and those which only apply after 12 weeks’ of continuous engagement.

Wish list item

Given the number of caveats and ambiguities, our single proposal is simple; allow the AWR to die on the vine and remove them from UK law altogether.

Comment

We do of course recognise that there are other areas that would benefit from clarity but there are further issues to be resolved by the government before changes can be implemented.  The terms of the UKs exit from the EU included a provision that the UK would not row back from EU law which then put the UK at a competitive advantage when compared to EU members.  There must be arguments that any ‘streamlining’ of EU employment law, including those suggested here, would create that position for UK employers.  Any such changes could potentially see the UK government on a collision course for a showdown in the ECJ – how deliciously ironic.