Holiday Pay & Entitlement Reforms for Irregular & Part-Year Workers

The government has made changes to simplify how holiday entitlement and pay are calculated in the Working Time Regulations. These reforms mainly target irregular hours and part-year workers, aiming to streamline processes and ensure fair treatment for all workers.

Here's what the reforms include:

1. New Category of Worker: Workers with irregular hours and those who work only part of the year are now classified as a new category of worker.
2. Holiday Entitlement Calculation: New methods for calculating statutory holiday entitlement for irregular hours and part-year workers.
3. Carry Over of Leave Due to Absences: Principles for the carry-over of holiday entitlement for workers on maternity, family-related leave, or off sick.
4. Removal of COVID-19 Regulations: Regulations related to COVID-19 carryover of leave have been eliminated.
5. Holiday Pay Rates: Clarifying the calculation of holiday pay rates and the principle of maintaining  'normal pay' during statutory annual leave.
6. Rolled-Up Holiday Pay: Introducing rolled-up holiday pay as an alternative method for calculating holiday pay for irregular hours and part-year workers.

1. Definition of Irregular Hours and Part-Year Workers

• Irregular Hours Worker: Someone whose paid hours vary in each pay period, like those on zero-hour contracts.
• Part-Year Worker: Employees who work only part of the year, such as seasonal workers.

2. Holiday Entitlement for Irregular Hours and Part-Year Workers

• Accrual Method: For years starting on or after April 1, 2024, holiday entitlement is calculated as 12.07% of actual hours worked in a pay period.
• Leave Entitlement When Leaving a Job: If leaving part-way through a leave year, entitlement should be calculated proportionally.

3. Calculation of Statutory Holiday Entitlement Accrued

• Pro-rating: For workers with fixed hours, entitlement is based on the proportion of a week they're contracted to work.
• Leave Entitlement During Maternity or Sick Leave: Workers continue to accrue leave during these absences.

4. Carryover of Leave

• Those unable to take leave due to maternity (and other forms of family leave) or sickness can carry forward untaken leave.
• Regulations prevent leave from being lost due to employer actions.

5. Holiday Pay Calculations

• All workers are entitled to the equivalent of 5.6 weeks of paid statutory holiday.
• Holiday pay is to be paid at 'normal' pay rates for at least the first 4 weeks of holiday (for full-year, fixed-hours workers) and for the full entitlement for part-year and irregular-hours workers (receiving rolled-up pay).
• Rolled-up holiday pay is introduced for irregular hours and part-year workers.
• Calculation methods are provided for both rolled-up and 52-week reference periods.

The reforms aim to clarify holiday entitlement and pay calculations for irregular hours and part-year workers, ensuring fair treatment and consistency across different employment arrangements.

With clearer definitions and methods, both employers and employees can ensure that holiday entitlements are fully used, promoting fairness and compliance with regulations.