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By Faye Lewis
Entering this new year, we're seeing big changes in how holiday entitlements and pay are handled at work. The government has updated the rules, starting from April 1, 2024, to make things simpler and fairer.
Defining Eligibility
There are new rules about who counts as 'Irregular Hours Workers' or 'Part-Year Workers' when it comes to holidays. 'Irregular Hours Workers' have ever-changing work hours in each pay period, while 'Part-Year Workers' are only hired for part of the year, sometimes with gaps in work and pay. Figuring out who falls into these categories is key and greatly depends on what's written in their work contract. Just having some time without work doesn’t automatically make someone a 'Part-Year Worker'—it's more about the consistency of pay during those gaps.
Calculation of Holiday Entitlements
The way we figure out holiday time for irregular hours and part-year workers has changed. Instead of the old system, they now get 12.07% of their hours worked in each pay period as holiday time. For example, if someone like Jill, who has irregular hours, works 68 hours in a month, they get 8 hours of holiday time (12.07% of 68 hours). This new method keeps it fair and accurate. Also, remember that statutory paid holiday entitlement remains capped at 28 days, irrespective of the number of workdays in a week.
COVID-19 Related Changes and Carryover Rules
There are new rules about carrying over holiday time. Workers can carry over a maximum of 8 days into the next year, but this depends on what the employer agrees to. There are extra rules for people who couldn't use their holiday due to COVID-19 reasons. These rules help manage holiday time better.
Holiday Pay Rates and Calculations
Now, there are clearer rules about what counts as 'normal' pay when it comes to holidays. For part-year and irregular hour workers, there's a new way to calculate holiday pay called 'rolled-up holiday pay,' which means they get 12.07% of their total pay for that period as holiday pay. This way, they're paid fairly and meet minimum wage requirements.
52-Week Reference Period Calculation and Examples
Employers are guided on using a 52-week reference period to compute holiday pay, taking into account paid weeks and excluding periods without pay or leave. This method looks at the past year of work, counting only the weeks when someone was paid and excluding times without pay or leave.
These changes are big and aim to make things clearer and fairer for everyone. They help both employers and workers understand holiday rules better, making sure everyone gets what they're supposed to.
Whilst the amounts we have mentioned in this blog post are based on the holiday amounts set in law, it's important that employers check their own contracts and policies to ensure these are consistently applied across different categories of worker within the organisation to avoid falling foul of discrimination claims. This is a complex and evolving area, in which commentators have been interpreting the new rules in different ways, so if you have any questions or queries at all about how this might affect you and your employees, please do get in touch.
We will be sure to share further updates on these new rules as we have them.
Employers need to adjust to these changes quickly to make sure they follow the new rules and make holiday payments fair. At Second Chapter, we're here to guide companies through these changes and help them understand the new employment rules.
About Faye Lewis
Faye Lewis is HR Business Partner at Second Chapter. With a degree in Events Management and CIPD Level 5 in People Management, she looks to make an informed decision, working hard to achieve the best outcome for all. Her professional passion is providing training and development programmes to share information and learn from others. Outside of work her interests are finding new eateries and walking her Lhasa Apso Basil.