1. Holiday entitlement for irregular hours workers and part-year workers will accrue at 12.07% of hours
The way holiday pay is calculated for ‘term-time / zero-hours’ and other irregular hours workers has changed on 1st April 2024.
If employees are part-year workers, the current calculation for annul leave of 5.6-week holiday entitlement could not be pro rated for part-year workers.
If your annual leave starts on 1st April 2024, the holiday entitlement will be calculated by accruing leave throughout the year.
Entitlement will accrue at 12.07% of hours worked in the employers pay period. The employer will be expected to round this up to the nearest hour. For example, if a monthly paid worker works 50 hours in a month, they will have accrued 6 hours of annual leave.
There is a restriction on annual leave accrual of up to no more than 28 days in any leave year.
During family-related leave or sick leave for irregular hours workers and part-year workers. This will be based on their average hours over a 52-week period (as they are not in work for their hours to vary).
Employers can continue to state if there is a certain time of year when they wish for their employees to take their annual leave.
2. Rolled-up holiday pay will be allowed for irregular hours workers and part-year workers
Rolled-up holiday means paying an additional amount for holiday pay along with basic pay throughout the employment relationship, instead of making a payment at the time holiday is taken.
From the 1st April 2024, the new Regulations applies only for irregular hours and part-year workers. It will not be compulsory for employers to implement rolled-up holiday pay, but they can choose to do so if they want to.
If an employer does choose to use rolled-up holiday pay, it must calculate it at the new rate of 12.07% of the worker’s earnings during the pay period. This is to then be paid at the same time that they get paid for work done, not when they take the leave (like full-time and part-time workers).
3. Workers on family-related and long-term sick leave must be allowed to carry over holiday
Under the new Regulations workers must be allowed to carry holiday forward into the next holiday year if they have not taken it because they were on maternity leave, adoption leave, shared parental leave, ordinary parental leave, paternity leave, parental bereavement leave or long-term sick leave.
All of our clients have been practicing this for some time. However, some employers have not.
This has been introduced to avoid employees from taking large amounts of holiday once they return from family or sick leave, or being paid time in lieu at the end of their employment, should they leave when they haven’t taken all of the leave.
Any carried forward holiday must be taken within 18 months of the end of the holiday year in which it was accrued.
This applies only to the carry-over of four weeks’ annual leave entitlement when on sick leave and 5.6 weeks’ annual leave for family friendly leave.
4. Workers who have not had a reasonable opportunity to take holiday must be allowed to carry it over
Under the new regulations, employers will have the burden of ensuring that their employees take their annul leave.
The new regulations will permit employees to carry over any untaken annual leave if the employer hasn’t:
- recognised their right to paid statutory annual leave;
- given them a reasonable opportunity to take annual leave;
- encouraged them to take the leave; or
- informed them that any untaken leave that cannot be carried forward will be lost at the end of the holiday year.
Should an employers allow their employees to take leave, but fail to pay them for it, then this will apply in this circumstance.
There is a maximum of four weeks of leave which can be carried over.
There is now no limit to how much annual leave can be accrued. The employee can carry the leave forward for as long as long as the employer’s failure to enable the employee to take it continues.
Employers will now have to ensure that they have processes in place to monitor workers to ensure they are taking the annual leave and be able to demonstrate they are encouraging them to take it.
5. Normal pay for the purposes of calculating holiday pay includes overtime and commission
In order for employers to comply to the new regulations, they need to understand how to calculate an employee’s ‘normal pay’.
Normal pay will include:
- payments, including commission payments, that are intrinsically linked to the performance of tasks which a worker is contractually obliged to carry out;
- payments for professional or personal status relating to length of service, seniority or professional qualifications; and
- other payments, such as overtime payments, that have been regularly paid to a worker in the 52 weeks preceding the calculation date.
Employers need to be considering all of these payments that have become ‘implied terms’ in their employment contracts.
These provisions apply only to the four weeks’ holiday although employers can choose to use the same method for all annual leave.
6. Workers will no longer be able to carry over leave that was untaken because of coronavirus
During the coronavirus pandemic, the Working Time Regulations were change to allow for the carry-over of annual leave where it was not reasonably practicable to take it because of the impact of coronavirus (either on the worker, the employer, the wider economy or society).
This amendment has now been removed and leave can no longer be carried over after 31st March 2024.