The Government has recently published new guidance on calculating holiday pay and entitlement, following changes to the law from 1 January 2024. One of the key changes includes employers being permitted to “roll up” holiday pay for irregular workers and part-year workers for holiday years starting on or after 1 April 2024. This can be done by applying a 12.07% uplift to a worker’s normal pay, and greatly simplifies the holiday pay calculation.
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 took effect from 1 January 2024, and bring about important changes to the law on holiday pay and entitlement as set out in the Working Time Regulations 1998. We reported on these reforms previously, and further information can be found here.
The new guidance published by The Department for Business & Trade helps explain the reforms and how to deal with them in practice. The guidance covers:
The guidance includes worked examples to help illustrate how the calculation of holiday pay and entitlement should operate under the new regime, and can be accessed here.
Hannah Pryce comments: “These reforms, and the legalisation of rolled up holiday pay in particular, will be a relief to many employers, who will find it much quicker and easier to calculate holiday entitlement and pay for irregular workers and part year workers going forward. The guidance provides useful explanations and worked examples (although legal advice may still be needed for any specific individual queries).”
If you have any questions about calculating holiday pay and entitlement, please contact a member of the team here.
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