Upcoming Changes to Holiday Pay in 2024
18th January 2024
Due to come into effect in April, the Government plan to make various changes to the current rules surrounding holiday pay for workers. We have not seen such a significant change made to holiday pay rules in quite some time and therefore it is important that employers are informed about the changes that will take effect for holiday years commencing from 1 April 2024.
What are the upcoming changes to holiday pay?
- Re-introducing rolled-up holiday pay for irregular hours and part-year workers.
- Re-introducing the 12.07% of hours worked calculation method for irregular hours and part-year workers.
- Changes to carry over of holiday rules.
- Changes to the definition of a week’s pay for holiday pay calculations.
As an employer, what do I need to know?
It is imperative that employers ensure they are aware of these changes and start thinking about how they will implement these going forward.
For “irregular hours workers” and “part-year workers”, there will be changes made to the Working Time Regulations (1998), which will state that:
- There will be a new holiday entitlement and holiday will be accrued based on 12.07% of the hours worked by the individual in the previous pay period.
- Holiday pay for part-year and irregular workers will be calculated in hours as opposed to weeks.
- The practice of paying ‘rolled-up’ holiday pay will be permitted for part-year and irregular workers.
- Employers will have the right to implement rolled-up holiday pay, meaning that holiday pay for these workers can be paid as an uplift of 12.07% to the normal rate of pay at the time work is done, instead of being paid at the time holiday is taken.
- Employers will no longer be obligated to keep records of their workers’ working time, as long as they are able to demonstrate that they are compliant with the Working Time Regulations.
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Holiday carry over
Workers will now have a statutory right to carry over holiday where in any leave year, the employer fails to:
- Recognise a worker’s right to annual leave or paid annual leave.
- Give the worker a reasonable opportunity to take leave or encourage them to do so.
- Inform the worker that leave not taken by the end of the leave year will be lost.
The right to carry over any untaken leave or leave which has been taken but was unpaid will last until the end of the first full leave year in which there is no such failure by the employer.
Amended definition of a week’s pay
The definition of a week’s pay for the purpose of calculating holiday pay will now include (if they did not already).
- Payments, including commission payments, intrinsically linked to the performance of tasks which a worker is obliged under their contract to carry out.
- Payments for professional or personal status relating to length of service, seniority, or professional qualifications.
- Payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation date.
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For any further information, please contact Sarah Everton, Head of Employment Law, on 01782 577000 or email firstname.lastname@example.org.