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Employment law update: proposed holiday pay revamp and family friendly legislation

Amongst the raft of proposed changes to employment laws and regulations, which the government has recently announced, are plans to simplify holiday pay and introduce family friendly legislation. In his latest article, Employment partner Nick Wilson looks at the proposals in more detail. 

Plans to simplify holiday pay

For many years, the statutory entitlement to annual leave and holiday has occupied the minds of employers, lawyers and the courts and Tribunals of Europe alike. A number of European Court of Justice decisions, as well as those of the appellate courts in England and Wales, have led to layers of different entitlements and, some say, an absence of clarity when it comes to calculating holiday pay.

As part of the retained EU employment reforms consultation, the Government is proposing to simplify entitlement to annual leave. It says that this will reduce the administrative burden to employers caused by the Working Time Regulations. For example, the Government proposes to have a set entitlement to paid annual leave of 5.6 weeks instead of the current system which, whilst still providing for 5.6 weeks’ leave, treats the first 4 weeks of the entitlement and then the balance of 1.6 weeks differently for the purpose of calculating holiday pay and carrying leave over to the following holiday year.

The consultation also seeks views from employers and workers on the calculation of holiday pay and how that can be addressed in legislation.

Of further note is the possible reintroduction of the concept of “rolled up” holiday pay whereby workers, instead of being paid holiday pay after they have taken leave, receive their holiday pay as a component of their hourly rate. It was common for agency and atypical workers to receive their holiday pay in this way and employers would usually pay it as an additional 12.07% of their hourly rate of pay, thereby rolling it up in the normal pay. Rolled up holiday pay was outlawed by the European courts, which meant employers then had to apply relative complex calculations of annual leave entitlement and then holiday pay itself.


Family related legislation receives Royal Assent

Three private members’ bills recently received Royal Assent on 25 May 2023. These legislative Acts are family friendly legislation, which provide additional support and protection for working parents and carers.

Neonatal Care (Leave and Pay) Act

This Act allows eligible employed parents to take up to 12 weeks’ paid leave, in addition to their other entitlements, where their newborn is admitted to neonatal care. This paid leave will apply if their baby receives neonatal care for more than seven continuous days before they reach 28 days old.

Protection from Redundancy (Pregnancy and Family Leave) Act

Existing protections under the redundancy legal framework, which currently only provides protection to parents on Maternity, Paternity or Shared Parental Leave, are extended under this Act. Instead, the Act will now provide the same protection during pregnancy and a period of time after a new parent has returned to work following taking statutory parental leave.

The extension of protection from redundancy appears to be particularly significant and we await to see the impact that it has on employers once the legislation comes into force.

Carer’s Leave Act

This Act introduces a statutory unpaid leave entitlement of up to five days for those employees who are caring for a dependant with long term care needs.

Although these Acts have received Royal Assent, the Government has not yet specified when each will come into force. The commencement dates will be laid down in subsequent secondary legislation and we will be keeping an eye on developments so that we can provide a further update.

For help and advice on these and other employment law matters, please get in touch with our friendly team on (01482) 325242 or email 

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