A recent statistic has revealed that only 1 in 5 UK employees take the annual leave that they are entitled to, perhaps because they were unsure of their rights or because they felt under pressure not to take leave.
Meanwhile, some amendments to holiday legislation has come into force, as follows:
The Retained EU Law provisions, which took effect on the 1st of January 2024, amended the law on holiday entitlement and pay to retain decisions made under EU law that would otherwise be lost due to Brexit.
The amendments include:
- simplifying holiday pay calculations by making rolled-up holiday pay (12.07% of pay) lawful for part-year workers and those who work irregular hours;
- restating various pieces of retained EU case law (to make it clear it remains part of UK law, post Brexit) to allow carry over of:
- all statutory annual leave to the following year when a worker is unable to take their leave due to being on family related leave;
- regulation 13 leave (4 weeks per year) for a maximum of 18 months where a worker is unable to take their leave due to sickness; and
- regulation 13 leave where the worker has not been given opportunity to take the leave or the employer has failed to inform them that any leave not taken and which cannot be carried over will be lost.
- defining ‘normal remuneration’ for the purposes of holiday pay for Regulation 13 leave to include commission payments and other payments, such as regular overtime payments.
These changes hold substantial implications for employers, necessitating a policy update that accommodates the new regulations:
- Understand the specifics of the new laws: Employers will need to fully grasp the implications of including commission payments and regular overtime payments in holiday pay and the conditions under which workers can carry forward unused holiday entitlement.
- Revise payroll processes: Ensuring full normal pay for the required holiday duration might necessitate changes in the payroll process.
- Update holiday policies: Employers should review and update their holiday policies to reflect these amendments. They should also make sure that these policy changes are communicated clearly to all employees.
- Invest in training: Employers should consider providing training sessions for their HR and management teams to ensure everyone understands the new regulations and how to implement them.
- Keep abreast of future changes: Employers should stay updated with the latest information to ensure continued compliance.
- Conduct an internal audit: Doing an internal audit of current holiday policies can help identify any potential gaps and areas for improvement. This can help ensure full compliance with new laws and mitigate any potential legal risks.
If you’re an employer and need further clarification on these changes or assistance in implementing them, speak to us about our TE Assist package and how it can benefit you.