Changes from 1 January 2024
- Any worker may carry over:
- Up to 8 days of leave into the next year with agreement with the employer. Additional allowances are dependent on the employer’s terms.
- Up to 28 days of leave into the next year for untaken statutory leave which is due to maternity or other family-related leave.
- Up to 20 days of leave into the following year for untaken statutory leave which is due to sickness. This carried over leave may be taken within 18 months of the leave year in which it is accrued.
- Workers may also carry over untaken leave where the employer:
- has refused to pay a worker their paid leave entitlement.
- has not given the worker a reasonable opportunity to take their leave and encouraged them to do so; or
- has failed to inform the worker that untaken leave will must be used before the end of the leave year to prevent it from being lost.
Definition of a week’s pay for holiday purposes
Workers are legally entitled to 5.6 weeks of paid statutory holiday entitlement per year. The first 4 weeks of statutory holiday pay (and all holiday pay paid to irregular hours and part-year workers) must be calculated based on a worker’s ‘normal’ rate of holiday pay.
From 1 January 2024 the regulations confirm what the case law had previously set out, i.e. that the following payments must be included in these calculations:
- Payments including commission payments which are intrinsically linked to the performance of tasks which the worker is obliged to carry out under their contract;
- Payments for professional or personal status relating to length of service, seniority or professional qualifications; and
- Payments such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation date.
The remaining 1.6 weeks’ entitlement can be paid at ‘basic’ rate of pay, being the worker’s basic remuneration.
Changes from 1 April 2024
Calculating Statutory Holiday Entitlement for Irregular Hours and Part-Year Workers
Definitions:
The government has also introduced two new definitions for irregular hours workers and part-year workers, as follows:
- Irregular hours worker – A worker whose number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.
- Part-year worker – A worker who under the terms of their contract, is required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.
Method for calculating statutory holiday entitlement for irregular hours and part-year workers:
The new holiday pay calculation method is as follows:
- For workers who have a leave year that begins before 1 April 2024:
During the first year of employment the worker receives one twelfth of their statutory entitlement on the first day of each month. Following the first year the worker gets holiday based on statutory and contractual entitlement relating to the proportion of the week that they work (pro-rata, i.e. the method below)
- For leave years that begin on or after 1 April 2024:
During the first year of employment and beyond, holiday entitlement is calculated at the rate of 12.07% of actual hours worked during the pay period.
Statutory paid holiday entitlement is capped at 28 days.
A holiday entitlement calculator is provided here.
Permitting the use of rolled-up holiday pay (RHP) once again
Rolled-up holiday pay (RHP) is the practice of paying holiday for people who work irregular hours or part-year workers.
For over 10 years in the UK, RHP has been declared to be unlawful, but it has still been used by a great many employers.
For leave years on or after 1 April 2024 it is now lawful to pay workers on irregular hours using RHP in the UK. Statutory holiday entitlement can be calculated by taking 12.07% of the hours worked in the pay period. The change is hugely convenient for employers, as it means they can avoid having to keep detailed records of the irregular hours worked by staff to calculate holiday pay.
Method for calculating leave accrual during maternity, family or sickness leave
Depending on their employment status, irregular hours and part year workers may take maternity, family or sickness leave during the year.
During maternity, other relevant parental leave, or sickness, a worker continues to accrue annual leave. The new amendments introduce a calculation method for such leave.
The method is the same as that of the statutory holiday entitlement; for leave years before 1 April 2024 one twelfth of the statutory entitlement on the first day of each month for the first year of employment and pro-rata thereafter. For leave years beginning on or after 1 April 2024, the method being 12.07% of actual hours worked in a pay period.
Examples and guidance can be found here.
What you should do:
- Review the definitions for irregular hour workers and part-year workers alongside your employees’ contracts to identify those that will fall under the new calculation method for statutory holiday.
- Ensure that you have systems and documents in place that communicate to their employees their right to take holiday, encourage employees to access the same throughout the year and explain that holiday will be lost if not taken. This should not only be done to ensure that employers are compliant with the regulations, but to enable workers to rest, recover and ensure they are able to maintain performance levels.
- Adjust the new methods of calculation if you grant holiday entitlements that are in excess of the statutory minimum.
For more help and advice, please contact the HR Services Team or contact us via the form below:
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