Ministers are cutting holiday allocations and pay for irregular and part-time workers, at a cost to staff of up to £248m a year.
The government is changing how holiday days and pay are calculated for people who do not work full-time throughout the year, such as shift-workers, school employees and those on zero-hours contracts.
This will mean that instead of receiving full holiday rights at the beginning of the year in the same way as full-time workers, 5 million British workers on temporary or irregular contracts will have to gradually gain them during the year.
Experts say the change is one of the most significant erosions of employment protections since the UK left the EU working time directive.
A government spokesperson said: “We are reforming this legislation to make overtime, holiday pay and entitlement legislation less complex and easier for employers to follow.”
Justin Madders, the shadow minister for employment rights, said: “This government rebuffed Labour’s efforts to protect paid holidays. They’ve well and truly shattered their manifesto promise to level up rights at work. Labour’s New Deal is our plan to make work pay, ensuring a high-growth, high-wage economy, underpinned by job security and strong rights at work.”
Labour officials could not guarantee, however, that they would overturn the change if they won the next election.
The change follows a protracted legal battle between Lesley Brazel, a music teacher on a zero-hours contract, and the school trust that employed her, over whether she should be get the same amount of holiday pay as her colleagues on full-time contracts.
The supreme court ruled last year that she should, prompting consternation among organisations that employ people on temporary or zero-hours contracts. In response, ministers in the business department said they would issue new rules to overturn the court’s ruling and ensure that companies can issue holiday days and pay on a pro-rata basis after all.
According to the government’s estimates, just over 5 million employees are covered by the new rules, many in education, where workers are often employed on term-time contracts, and retail, where people often work shift patterns or zero hour contracts.
A government analysis published this week reveals that the change will be so wide-ranging that it will save employers between £50m and £248m every year.
Officials said, however, that estimates of the number of people who will lose out are uncertain as it is unclear how many employers were actually abiding by the rules set out by the supreme court. “It is very difficult to know exactly how many employers were following the previous case law, so the figures involved are speculative and likely a significant overestimate,” a spokesperson said.
Officials say they were able to issue the new rules, in part because Britain has left the EU and with it the strict labour laws covered by the working time directive.
Richard Arthur, head of trade union law at Thompsons Solicitors, said: “This move takes advantage of what the government is allowed to do post-Brexit. The government is taking that opportunity and bringing in new rules to the advantage of employers.”
