The government is to legislate to retain rolled-up holiday pay for irregular hours, zero hours and part-year workers and set out that it must be calculated based on total earnings in the pay period.
Its announcement follows a consultation earlier this year that sought views on reforms to the Working Time Regulations, holiday pay, and the Transfer of Undertakings (Protection of Employment (Tupe)) Regulations.
The amount of annual leave that irregular hours and part-year workers are entitled to will be calculated using an accrual method based on 12.07% of hours worked in the pay period, whether that is monthly, weekly or daily. An accrual method will be introduced for when they take sick, maternity or family-related leave.
Emergency rules on annual leave implemented in 2020 that allowed workers to carry over four weeks of leave into the next two years if it was not reasonably practicable for them to take it due to the pandemic, will be removed. As of 1 January 2024, 1.6 weeks can be carried over to the next leave year where there is written agreement between an employer and employee, and any leave carried over that has been accrued by that date must be taken before 31 March.
Regarding Working Time Regulations, the law will now be clarified so that only records of weekly working time are needed rather than the previous daily working time.
Furthermore, small businesses with less than 50 employees doing a transfer of any size, and businesses of any size doing a transfer of fewer than 10 employees without any existing worker representatives, will be able to consult directly with employees.
Kate Palmer, HR advice and consultancy director at Peninsula, said: “The guidance will be welcomed by employers, ending lots of confusion around calculating holiday entitlement for part-year workers following the July 2022 ruling in the Harpur Trust v Brazel case. Laws will still need to be made for any of these proposed changes to take effect, but employers should take heart from this new guidance, ensuring they stay up to date on any legislative changes.”
Tania Bowers, global public policy director at The Association Of Professional Staffing Companies, added: “The plans outlined are, in our view, the only fair way to pay irregular workers and ensure they are no longer at risk of losing accrued holiday pay due to the way they are employed. However, it is now important for recruiters and umbrella firms to assert to workers and end clients that individuals must take the holiday or pay they are owed and the Working Time Regulations.”
