Hr Smart Logo

New UK Employee Holiday Legislation 2024

A sun setting over a stretch of water.

This article aims to clarify the main changes that the UK Government has made to the holiday entitlement rules introduced on the 1st of January 2024.

Definitions:

Irregular Hours Worker

A Worker or Employee who works variable hours each week such as a casual or zero-hours contracted employee.

Part-Year Worker

A Worker or Employee who is on a full-time contract but is only required to work for part of the year i.e. teaching assistant during term time only.

 

 

Calculating Holiday Entitlement For Irregular Hours or Part Year Workers and Employees From 1st April 2024

For Holiday years starting after 1st April 2024, the Government has re-introduced the accrual method. This means that holiday entitlement can be calculated by applying a percentage of 12.07% to the actual hours worked in a period to calculate how much holiday entitlement has been accrued in that period.

This calculation is worked out by taking 52 weeks less 5.6 weeks (minimum holiday entitlement) = 46.4 weeks then divided by 5.6 weeks = 12.07%

If your contracts of employment stipulate that an employee is entitled to more than 5.6 weeks, you will need to amend the calculation above to work out the higher percentage to apply to irregular and part-year workers and employees e.g. for 6 Weeks Holiday

52 weeks – 6 weeks = 46 weeks

6 weeks / 46 weeks = 13.04%

This rule also applies to Agency Workers who accrue the same rights as Workers i.e. after 12 weeks of continuous engagement and qualify as irregular or part-year workers.

An example of how to use the 12.07% rate is given below:

Leave Affected By COVID-19

Any leave carried forward as part of the temporary change instigated during the COVID-19 lockdowns will not be able to take this leave forward from 1st January 2024.

Any leave outstanding due to this period, must be taken by 31st March 2024 or be forfeited. Any leave accrued due to the Coronavirus period should be paid in lieu if the employee has not taken it by 31st March 2024 for example employment termination.

 

Full and Part-Time Holiday Pay Rate Calculations 1st April 2024

Workers and Employees must receive holiday pay that equals their normal pay they could expect to receive if they were at work. This means that their holiday pay must include the following from 1st January 2024:

  • payments intrinsically linked to the contractual tasks they perform in their role e.g. commission;
  • payments relating to their seniority or professional status;
  • any other regular payments that could reasonably be expected to be paid on a regular basis in the 52 weeks preceding the holiday pay calculation e.g. overtime

 

Rolled Up Holiday Pay Calculation

If an employer wants to, they can now include holiday pay in the weekly or monthly pay of each employee by using the accrual method of 12.07% (or other rate if higher). This applies to holiday years beginning on or after 1st April 2024.

You should use the calculation below to calculate the holiday pay:

The effect of implementing the above may impact or change your current contractual arrangements. If this is the case, you will need to consult with the employees before implementing this as a policy. Even if the contract allows for Rolled-Up Holiday Pay, you should still communicate well in advance of introducing the method.

The payslips must state on them clearly the element of pay that is designated as Rolled-Up Holiday Pay.

The effect of Rolled-Up Holiday Pay is that when holiday is taken by the worker or employee, their holiday period is unpaid as they have already received payment for their holiday entitlement in each pay period.

 

52-Week Holiday Pay Calculation

If you do not wish to use the Rolled-Up Holiday Pay method, you can continue to use the 52-week average pay calculation. To do this you must look at the last 52 weeks where the employee has earned some pay and take the average weekly earnings to apply to their holiday entitlement.

A week is defined as starting on a Sunday and finishing on a Saturday or whatever is in their contract that defines one week.

If the employee does not have 52 weeks of continuous employment, you must use the average for the number of weeks where they have worked. If they are in their first week, then you must pay them a sum that fairly represents their average pay.

If the employee has not worked every week in the last 52 weeks i.e. has been off sick or has worked irregularly, then you need to reference up to a maximum of 104 weeks to calculate their 52-week average pay.

 

Contact Us

Further details of all of the above information, together with worked examples can be found at the link below:

Holiday pay and entitlement reforms from 1 January 2024 – GOV.UK (www.gov.uk)

If you have any concerns on any of the above details and changes or just need some HR support, we are ready to help you. Simply call us on 01903 754107 or email us at heidi@hrsmartuk.com or jon@hrsmartuk.com

Recent Blogs

Tags

Transform your HR capabilities with HR Smart