New Government Guidance on Holiday Pay

March 20, 2024

The government has unveiled fresh guidance aimed at simplifying holiday pay calculations for part-year and irregular-hours workers. Effective from April 1st, this initiative streamlines processes, making it easier for businesses to navigate these entitlements.

Derived from a 2019 Supreme Court ruling, which granted part-year workers on permanent contracts the same holiday pay entitlement as their full-time counterparts, this guidance ensures fairness across the board. In essence, part-year and irregular hours workers will now have their holiday pay calculated based on 12.07% of their actual hours worked, referred to as rolled-up holiday pay.

This simplified calculation method acknowledges that all workers are legally entitled to 5.6 weeks of leave annually. Employers are encouraged to monitor leave taken throughout the year to ensure compliance with this entitlement. Moreover, the guidance recognises that certain employees may be entitled to more leave as per their contract terms.

The guidance introduces clear definitions for irregular hours workers, encompassing those whose work hours are variable. This extends the coverage to casual and zero-hours contracts, as well as seasonal agricultural staff. By providing clarity on carry-over annual leave, the guidance empowers part-year and irregular-hours workers to retain their entitlements, even in cases such as maternity leave. This aligns with the rights already afforded to permanent employees.

It’s important to note that while these changes mark a positive shift, not all holiday pay calculations will require immediate adjustment. Employers need not rush to implement changes mid-year. Instead, changes will apply at the commencement of the next holiday year, ensuring a smooth transition.

In essence, this new guidance signals a more straightforward approach to holiday pay, benefiting both employers and workers alike. By simplifying calculations and extending entitlements, it fosters fairness and transparency in the workplace.

If any employers require guidance on holiday schemes or calculations, please get in touch here with our Payroll Director, Jessica Haunch.

Jessica Haunch

Jessica is our Payroll Director who has built up over 11 years of experience within the Payroll industry.  She leads our payroll department which is a national function that is strategically placed across all of our offices.

Jessica is responsible for ensuring her team works efficiently and accurately while maintaining compliance with all relevant regulations.

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