Changes to holiday entitlement and pay for irregular-hours and part-year workers

From 1 April 2024, there will be changes to holiday entitlement and pay for irregular hours and part-year workers. On 1 January 2024, the Government introduced changes to the Working Time Regulations. The aim was to make it simpler for employers to calculate annual leave and pay for those not working full-time.

The legislative changes have been introduced in waves, with more changes to come in April. Employers will need to use a new accrual method for working out holiday entitlement if they have qualifying employees. Rolled-up holiday pay will also be allowed for part-year and irregular hours workers.

Associate, Steph Marsh, explains how to stay up-to-date and make the necessary adjustments.

New Definitions For Part-Year And Irregular-Hours Workers

As part of the changes to the Working Time Regulations, the Government has given new definitions for irregular hours workers and part-year workers.

An irregular hours worker is somebody whose number of paid hours worked in each pay period is wholly or mostly variable. Part-year workers are defined as only being required to work for part of the year with a period of at least a week for which they are not paid or required to work.

These definitions aim to help employers understand which employees the new holiday entitlement accrual method and rolled-up holiday pay apply to.

Holiday Entitlement Accrued

For employees whose hours don’t fit into the definition of irregular hours or part-year workers, the statutory holiday entitlement doesn’t change.

As this legislation was updated at the start of the year, any part-year workers or irregular-hours workers whose holiday years began after 1 January 2024 but before 1 April 2024 will be calculated in the current way.

However, for those two employee categories whose holiday years begin after 1 April 2024, there will be a new accrual method. Their holiday entitlement should be calculated as 12.07% of the actual hours worked in a pay period.

The 12.07% figure is based on the premise that all workers are entitled to 5.6 weeks’ leave in a holiday year.

Holiday Pay

If you are an employee, then you are entitled to holiday pay. Workers should not suffer financially for taking time off work, which is why the holiday pay that an employee receives should reflect the pay they would have earned had they been at work for that time.

As of 1 April 2024, part-year and irregular hours workers are legally entitled to the minimum amount of 5.6 weeks paid holiday entitlement per year; with the pay to be calculated according to the actual hours worked using the new 12.07% accrual method.

Part of these legislative changes mean that part-year and irregular hours workers are also entitled to what is known as Rolled-Up Holiday Pay. This allows employers to include an additional amount to each payslip to cover their employee’s holiday pay.

Employers will be able to use this payment method as another way to calculate holiday pay for these workers. It’s important to review what type of employees you have and check whether their holiday pay and entitlement will be impacted by this year’s holiday period or next year’s.

It will also be up to employers to decide whether they want to utilise Rolled-Up Holiday Pay. If so, the various holiday clauses in policies or contracts will need to be amended.

To read in more detail about the changes to the Working Time Regulations, you can visit the Government website.

Changes To Employment Law

As an employer, it can seem daunting when there are legislative changes to employment law. With the influx of new regulations regarding the workplace, how can you make sure you’re staying compliant?

At Coodes Solicitors, our Employment team are constantly keeping up-to-date with any legislation that might affect employers and employees. We can offer varied advice and would be happy to assist you with the upcoming changes to annual leave.

Contact Associate Steph Marsh for more information or use our online contact form.