Changes to the Working Time Regulations have been introduced as of 1 January 2024.
The changes follow developments and cement decisions from recent cases into written legislation. This primarily impacts irregular hours and part year workers/employees (collectively referred to as ‘workers’).
‘Irregular hours workers’ are those whose contractual hours are mostly variable, for example, a worker on a zero hours contract.
‘Part year workers’ are only required under their contract to work part of the year and have periods within the year where they are not required to work. This time would be unpaid, for example, a teaching assistant who only works during term time, or seasonal farm workers)
Holiday Pay
The changes permit the use of rolled up holiday pay for irregular hours and part year workers. The pay due is calculated based on 12.07% of the hours worked in a pay period and is rounded up or down to the nearest hour. This calculation will apply to holiday entitlement from April 2024, and is based on the statutory minimum holiday entitlement of 5.6 weeks (.i.e.. 12.07% of the working weeks in a year). This is subject to the worker’s contract, as if they are entitled to more holidays than the statutory minimum they may be entitled to more pay.
If the worker leaves employment or stops working, then their entitlement will be pro-rated.
Where the worker has taken maternity/family leave or is off sick from April 2024 the calculation is based on the previous 52 weeks of work but does not include time away from work on maternity or family related leave, or sickness absence.
Employers may either pay workers when the holiday is taken at the rate of the average weekly pay over the previous 52 weeks or pay rolled-up holiday pay at a rate of 12.07%.
Holiday pay rates
Workers are entitled to a statutory minimum of 5.6 weeks holiday. 4 weeks of this entitlement must be paid at the “normal” rate, which should include:
- Payments, including commission payments, which are intrinsically linked to performance of tasks which the worker is obliged to carry out;
- Payments for professional or personal status relating to length of service, seniority or professional qualifications; and
- Payments such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation date.
The remaining 1.6 weeks is paid at the worker’s basic rate of pay.
If an irregular hours/part year worker is paid by rolled up holiday pay, the full 5.6 weeks must be paid at the normal rate of pay.
Carry over
Workers may be able to carry over untaken holiday subject to their employer’s agreement or internal policy.
Any worker is entitled to carry over up to 28 days into the following leave year if they were unable to take their holiday entitlement due to taking maternity or family related leave.
If a regular hours worker is unable to take their holiday entitlement due to being off sick, they will be entitled to carry forward up to 20 days provided it is taken within 18 months following the end of the leave year in which it was accrued but untaken. Irregular hours workers in the same circumstances can carry over up to 28 days.
Any worker will be entitled to carry over leave entitlement into the next year if:
- the employer has refused to pay a worker their paid leave entitlement;
- the employer has not given the worker a reasonable opportunity to take their leave and encouraged them to do so; or
- the employer failed to inform the worker that untaken leave will must be used before the end of the leave year to prevent it from being lost.
The changes in the law also impact COVID carry over. Previously workers could carry untaken leave into the next 2 years if they were unable to take the leave due to their work being affected by COVID. From 1 January 2024 this is no longer the case. Workers can still use such leave accrued prior to 1 January 2024 provided it is taken by 31 March 2024, but cannot claim payment in lieu of any remaining entitlement they were unable to take due to COVID.
What you can do
It is important that employers ensure they are aware whether their staff fall into the categories of irregular hours workers and part year workers under the legal definitions. Employers should also review their holiday pay calculations and the methods by which holiday pay is paid, and ensure practices are in line with the changes to the law as above and that they are not in breach of contract by unilaterally changing how holiday pay is paid. We can assist in helping businesses/employers prepare and implement such policies and ensure they are paying holiday pay in accordance with employees’ legal entitlement to avoid falling foul of claims.
Equally, we are able to assist workers and employees. Workers should be aware of their rights in relation to holidays and pay, and if they are underpaid, they may wish to take legal action against their employer. If you feel you have been underpaid or have not been allowed the holidays you are entitled to our Employment Law team would be happy to advise.