Changes to Holiday Pay

From the beginning of the year, changes to holiday pay calculations, particularly in relation to those with irregular hours or who are part-time, come into force.  Gareth Matthews, Head of Employment at mlplaw, sets out the key points.

Following Government consultation, the following reforms have been made to holiday pay calculations, introducing into UK law:

(1) rolled-up holiday pay for irregular hours and part-year workers;

(2) an accrual method to calculate entitlement at 12.07% of hours worked in a pay period for irregular hours and part-year workers in the first year of employment and beyond;

(3) a method of accrual of annual leave for irregular hours and part-year workers for when they are on other periods of leave (eg maternity/family related leave or sick leave), and

(4) various pieces of retained EU case law considered necessary to retain workers’ overall level of protection and entitlement in relation to carry over of annual leave when a worker is unable to take their leave (eg due to being on maternity/family related leave or sick leave).

The changes also revoke the temporary rules brought in during Covid, so that workers can no longer accrue Covid carry over leave but can use leave accrued prior to 1 January 2024 on or before 31 March 2024.

If you would like advice from the Employment team at mlplaw in respect of any of the issues raised here or more generally, please do not hesitate to get in touch on 0161 926 9969 or employment@mlplaw.co.uk, or follow us on Twitter @HRHeroUK