For holiday years starting on or after 1st April 2024, Employers will be permitted to calculate annual leave entitlement as 12.07% of the hours worked in a pay period for irregular hours workers and part-year workers in the first year of employment and beyond. This does not apply to workers with regular hours who continue to accrue as 1/12th of the 5.6 weeks entitlement for each month or part month.
Also employers will have the option to operate Rolled-up Holiday Pay (RHP) for the same cohort based on 12.07% of all earnings (including overtime and other pay allowances) within that pay period.
So who does this apply to?
Irregular Hours and Part Year Workers
Irregular hours workers and part-year workers are now defined in new regulation 15F of the Working Time Regulations (WTR), which is inserted by statutory instrument for holiday years starting on or after 1st April 2024.
The instrument also introduces a method to calculate how much leave is accrued when irregular hours workers and part year workers take maternity leave or other family related leave (which will be defined as ‘statutory leave’). Employers will be able to look back over a 52-week reference period to calculate an average of hours worked across that period.
Employers would need to include weeks not worked and not on statutory leave, so that the amount of accrued leave is now proportionate to the time worked. This changes the position from the April 2020 changes to the employment rights act which excluded zero pay weeks.
New option for Rolled-up Holiday Pay (RHP)
Also for holiday starting on or after 1st April 2024 Employers will additionally be permitted to calculate the holiday pay for irregular hours workers and part year workers using Rolled-up Holiday Pay (RHP) should they choose and wish to.
Workers will not be able to request that they receive RHP. It will be the employer’s choice whether to use RHP, continue to use a reference period for calculating annual leave, or to offer both.
If employers choose to use RHP, they will be required to calculate a worker’s holiday pay as 12.07% of the worker’s total earnings within a pay period. They would not calculate RHP by calculating 12.07% a worker’s normal remuneration and basic remuneration separately.
The employer will be required to pay the worker with each pay day, rather than when the leave is taken as had previously been required under European case law, and employers must clearly mark RHP payments as separate items on each payslip.
Can SD Worx help?
Certainly. Although employers have a variety of choice in relation to holiday pay law and how it applies, the SD Worx pay and HR solution may have options that work for you and your choice.
The solution capabilities have pre-existing capabilities that align and support the payment of Rolled-up Holiday Pay to those you identify as meeting the legal definition of Irregular Hours and Part Year Workers. These options are not to be used for other types of workers and employees.
We can provide:
- Training either via the SD Worx Academy or one to one
- Consultancy assistance
- Solution assistance
If you need some guidance or help please complete the following and we will be in touch to provide options:
Last update 9/11/2023 Effect date adjusted to reflect the proposed regulation 15B commencement for holidays on or after 1st April 2024.