Proposed employment law changes affecting holiday pay, non-compete clauses and TUPE

The government has announced a number of interesting proposed reforms as it looks to make changes following Brexit. 

The government has announced a number of interesting proposed reforms as it looks to make changes following Brexit. 

Rolled-up holiday pay

Since the Working Time Regulations were introduced in 1998, the provisions covering annual holiday and holiday pay have been problematic.  This is particularly so when applied to those with atypical working patterns, for example, those on term time or zero-hours contracts and others who work sporadically.  Rolled-up holiday pay has always been a pragmatic solution, but technically it is not permitted by the current regulations.  Presently, payment is required at the time holiday is taken, at a rate calculated by reference to past earnings. 

The government proposes rectifying this and introducing rolled-up holiday pay.  This will allow employers to include in their payroll an extra percentage of pay, on top of the wages or salary being paid, to represent the holiday pay earned during that pay period – effectively holiday is being paid for as it accrues.  Holiday will then be deemed taken during non-working periods.  This change will be welcomed by employees and employers.

Amalgamating statutory minimum holiday and simplifying records of working hours

Further proposals look at changes to the Working Time Regulations.  Consideration is being given to amalgamating the 4 weeks of statutory leave that has its roots in EU law with the 1.6 weeks of additional statutory leave that the UK subsequently introduced to take account of bank holidays – currently these two periods of leave can involve different legal rights because of their different histories.  If implemented, there will be a single 5.6 week period of statutory minimum leave with the same rights applicable to the whole period. 

There is also a proposal to remove some of the obligations to keep records of working hours currently required to comply with the Working Time Regulations.  This is seen as a measure that will help cut red tape.

Restricting non-compete clauses

Clauses that prohibit former employees from working in a competing business are an important way of safeguarding commercial relationships when key people leave employment.  They must be balanced against the individual’s right to earn a living.  The government proposes restricting the period of such clauses to 3 months.  This will have greatest impact in relation to those who are in senior or commercially sensitive jobs. 

The changes will not prevent employers using worked notice, garden leave or other restrictions (such as non-solicitation clauses) to protect their businesses.  Indeed, these provisions will become more important if these proposals are implemented.

Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

When a business transfer is proposed, there is a duty to inform or consult with “appropriate representatives” of all affected employees.  “Appropriate representatives” are representatives of a recognised trade union or, where no trade union is recognised, elected employee representatives.  Presently, it is not possible to instead consult with the individual employees affected by the transfer unless the employer has fewer than 10 employees and the terms of a small business exception is met. 

The government is to consult over permitting consultation directly with the affected individuals in businesses that have fewer than 50 people and transfers affecting less than 10 employees where those businesses do not already have representatives in place.  For larger exercises, there can be advantages to consulting with representatives rather than each affected employee.  However, if implemented, it will certainly simplify smaller TUPE transfers.


It is important to note that these are only proposals at present.  It is said that they will be implemented only if Parliamentary time allows.  We shall now have to wait to see how these proposals develop, the detail of what the changes will involve and, perhaps most importantly of all, whether there will be sufficient Parliamentary time.

If you require advice with regard to any of these issues, or if you need advice regarding any other employment law matter, our Employment Law team has the knowledge and experience to advise you.

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Picture of Anthony Wilcox, Partner in Employment Law

Anthony Wilcox, Partner in Employment Law

The government has announced a number of interesting proposed reforms as it looks to make changes following Brexit. 

Proposed employment law changes affecting holiday pay, non-compete clauses and TUPE

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