The UK government has introduced employment law reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations. These reforms took effect from 1st January 2024 with implementation of some of them from 1st April 2024. They mainly relate to entitlement and pay for individuals who don’t work regular hours or only work part of the year. Here are the highlights:
- Clearer Definitions
- The government is now clearly defining who counts as a worker with irregular hours and one who works only part of the year:
- An irregular hours worker is one whose paid hours worked in each pay period during the term of their contract is ‘wholly or mostly variable’.
- A part-year worker is one who is contracted to work ‘only part of a leave year and there are periods within that year of at least a week which they are not required to work and which they aren’t paid for.’ For example, teaching assistants who only work during term time, and who aren’t paid during school holidays.
- Calculating holiday time
- The way statutory holiday pay is calculated for workers who aren’t part-year or irregular hours workers, is staying the same:
- All full-year full-time or part- time workers (except self-employed people), are legally entitled to 5.6 weeks of paid statutory holiday entitlement per year. 4 weeks of this entitlement must be paid at a worker’s ‘normal’ rate of pay. What’s ‘normal’ could include regular payments, such as overtime, regular bonuses and commission. The remaining 1.6 weeks’ entitlement can be paid at ‘basic’ rate of pay, that is, the worker’s basic remuneration.
- With effect from 1st April 2024, there’s a new way to figure out how much holiday time part-year and irregular hours workers should get in the first year of employment and beyond. Holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period. The government’s holiday entitlement calculator can help you to work out the entitlement.
- Irregular hours & part-year workers on maternity or sick leave
- With effect from 1st April 2024, a new approach is being introduced to work out how much leave an irregular hour or part-year worker has accrued when they take maternity leave or family-related leave, or are off sick.
- Rolled-Up Holiday Pay
- The government has also introduced ‘rolled-up holiday pay’ as an acceptable way to calculate holiday pay for people with irregular hours or part-year contracts. This method allows holiday pay to be included in each pay packet and can be used from 1st April 2024..
Employers may choose not to use rolled-up holiday pay, in which case they can use the existing 52-week reference period method to look back at a worker’s previous 52 paid weeks to calculate what that worker should be paid for a week’s leave.
These changes are meant to simplify things and make sure part-year workers and those who work irregular hours get their fair share of holiday time and pay.
If you want to avoid breach of contract or other legal disputes about holiday pay and entitlements, check out the detail of these reforms in the government’s ‘Holiday Pay and Entitlement Reforms from 1st January 2024’
