Do you employ ‘seasonal’ workers or workers on flexible, ever-changing hours?
You may be in the leisure and tourism industry or simply employ young workers who are only available in the summer holidays. Whatever the reason may be, the Government has recently released new guidance on changes to holiday pay for seasonal and irregular hours workers that you should probably get familiar with.
In case you missed it, here is the original heads-up from our employment law partner, Hannah Pryce.
If you’re short on time and don’t fancy reading what is an inevitably complex guidance note on The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, I will try my best to help by highlighting the key changes you need to get to grips with.
The changes are already in effect as of 1 January 2024 but the new accrual rate only applies to leave years starting on or after 1 April 2024. So, what do you need to know?
| Type of worker | Definition | Comments |
| Irregular hours worker | The number of paid hours the worker works in each pay period is, under the terms of their employment contract, wholly or mostly variable
| If the contract specifies that the worker will work on a pattern of 30 hours in week 1 and then only 15 hours in week 2, this would not be ‘wholly or mostly variable’. Some zero-hour workers may fit this definition. |
| Part-year worker | The worker is required to work only part of the year and there are periods within that year of at least one week where they are not required to work and will not be paid for. | These are more commonly referred to as ‘seasonal workers’. A worker who is paid an annual salary (as opposed to by the hour) is unlikely to fit this definition. |
Holiday entitlement for irregular hours workers and seasonal workers will accrue at a rate of 12.07% per actual hour worked in a pay period. The guidance sets out a useful example of to do this calculation in practice.
If adopting the reference period method of accrual (which is the most common and easiest method), the holiday pay the workers should receive is their average pay over the previous 52 weeks worked. Weeks where they did not work should be excluded, along with any time when the worker was on sick leave, maternity leave or any other family-related leave.
In order to find these 52 weeks worked, you should go back as far as 104 weeks. If, when looking back over 104 weeks, less than 52 weeks were worked, you should take the average on the basis of this lower number of weeks worked.
If the worker does not take their accrued holiday entitlement by the time they leave, they should be paid a sum to equal to this (payment in lieu).
Workers’ average pay for the purposes of calculating their holiday pay should include:
This extends to all workers/employees, not just those employed on part-year / irregular hours contracts.
When certain workers are on sick leave, maternity leave or other family-related leave, they remain entitled to accrue annual leave.
You should adopt the same accrual rate as set out above (12.07%) by calculating the worker’s hours using the following process:
Irregular hours workers and seasonal workers are entitled to carry over up to 28 days of leave where they are unable to take their statutory holiday entitlement due to maternity leave, sick leave or any other family-related leave. The workers have to use this carried-over leave within 18 months of the end of the relevant leave year otherwise it will be lost.
Employers should make the workers aware and encourage the exercise of this right to carryover leave where applicable.
Simple really!
If you have any questions about calculating holiday pay and entitlement, please contact a member of the team here.
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