[UK] Holiday pay and entitlement changes

In the UK, a series of holiday pay and entitlement changes came into effect on April 1, 2024. HR magazine details what employers and employees need to know, with the help of employment lawyers.

‘Irregular’ or part-year workers’ entitlements

A new accrual method for irregular-hour workers and part-year workers means that holiday entitlement will be calculated as 12.07 per cent of actual hours worked in a pay period.

Claire Brook - employment law partner at legal firm Aaron and Partners - told HR magazine that this change is intended to make holiday entitlement more fair across part-year and full-time workers.

It reportedly follows the Harpur Trust vs Brazel case in which the Supreme Court ruled that employees who only work for part of the year (e.g. term-time workers) are entitled to 5.6 weeks of holiday pay, like employees who work all year round. 

Ms Brook told HR magazine, “Following consultation, the government has taken steps to change the method of calculating holiday entitlement for irregular or part-year workers after a Supreme Court decision left concerns that some irregular or part-year workers would receive more holiday than regular-hours or full-year workers. 

“Government guidance has set out the specific steps for calculation: first, divide the hours worked in a pay period by 100. Multiply that answer by 12.07 and then round up or down to the nearest hour.”

Rolled-up holiday pay for irregular-hours and part-year workers

Employers can now legally 'roll up' holiday pay into the basic pay rate for irregular-hours and part-year workers only. 

Ms Brook stated that it would be important for employers to communicate plans to move to rolled-up holiday pay to staff. She said, “If you are seeking to make a change to terms and conditions, seek voluntary agreement to the proposals. Once agreed, it is imperative that updated contracts of employment/variation of contract letters are signed by both parties, clearly explaining how and when holiday pay is calculated and paid, and that the rolled up pay is shown as a separate item on payslips.

“Where employers seek to enforce changes to contractual terms, it is important that they go through an appropriate consultation process and offer contractual notice in advance. Advice should be sought at the planning stage.” 

Carrying over leave

Legal changes mean that employees may carry over leave if they were unable to take their holiday leave as a result of family leave or sickness absence.

Speaking to HR magazine, Emma Thompson - head of employment at Thackray Williams - said, “There is a new express right to carry over leave that is untaken due to maternity and other family-related leave, sick leave, and circumstances where a business has either denied the employee a right to paid leave or failed to ensure that they have a reasonable opportunity to take it.”

Ms Brook reportedly stated that holiday may be carried over where the employer fails to recognise a worker's right to annual leave, fails to give the worker a reasonable opportunity to take leave or fails to tell them that leave not taken will be lost.

She told the magazine, “In such cases, the worker has the right to carry over any statutory untaken leave or leave which has been taken but was unpaid. The right will last until the end of the first full leave year in which there is no such failure by the employer.”

Source: HR magazine

(Link and quotes via original reporting)

In the UK, a series of holiday pay and entitlement changes came into effect on April 1, 2024. HR magazine details what employers and employees need to know, with the help of employment lawyers.

‘Irregular’ or part-year workers’ entitlements

A new accrual method for irregular-hour workers and part-year workers means that holiday entitlement will be calculated as 12.07 per cent of actual hours worked in a pay period.

Claire Brook - employment law partner at legal firm Aaron and Partners - told HR magazine that this change is intended to make holiday entitlement more fair across part-year and full-time workers.

It reportedly follows the Harpur Trust vs Brazel case in which the Supreme Court ruled that employees who only work for part of the year (e.g. term-time workers) are entitled to 5.6 weeks of holiday pay, like employees who work all year round. 

Ms Brook told HR magazine, “Following consultation, the government has taken steps to change the method of calculating holiday entitlement for irregular or part-year workers after a Supreme Court decision left concerns that some irregular or part-year workers would receive more holiday than regular-hours or full-year workers. 

“Government guidance has set out the specific steps for calculation: first, divide the hours worked in a pay period by 100. Multiply that answer by 12.07 and then round up or down to the nearest hour.”

Rolled-up holiday pay for irregular-hours and part-year workers

Employers can now legally 'roll up' holiday pay into the basic pay rate for irregular-hours and part-year workers only. 

Ms Brook stated that it would be important for employers to communicate plans to move to rolled-up holiday pay to staff. She said, “If you are seeking to make a change to terms and conditions, seek voluntary agreement to the proposals. Once agreed, it is imperative that updated contracts of employment/variation of contract letters are signed by both parties, clearly explaining how and when holiday pay is calculated and paid, and that the rolled up pay is shown as a separate item on payslips.

“Where employers seek to enforce changes to contractual terms, it is important that they go through an appropriate consultation process and offer contractual notice in advance. Advice should be sought at the planning stage.” 

Carrying over leave

Legal changes mean that employees may carry over leave if they were unable to take their holiday leave as a result of family leave or sickness absence.

Speaking to HR magazine, Emma Thompson - head of employment at Thackray Williams - said, “There is a new express right to carry over leave that is untaken due to maternity and other family-related leave, sick leave, and circumstances where a business has either denied the employee a right to paid leave or failed to ensure that they have a reasonable opportunity to take it.”

Ms Brook reportedly stated that holiday may be carried over where the employer fails to recognise a worker's right to annual leave, fails to give the worker a reasonable opportunity to take leave or fails to tell them that leave not taken will be lost.

She told the magazine, “In such cases, the worker has the right to carry over any statutory untaken leave or leave which has been taken but was unpaid. The right will last until the end of the first full leave year in which there is no such failure by the employer.”

Source: HR magazine

(Link and quotes via original reporting)