Is this now applicable for you? – back in January 2024 guidelines for Irregular hours and Part Year Workers holiday accrual were updated. If you employ workers with irregular hours or part-year contracts, and your holiday year starts (on or after 1st April 2024) so for many this will be January 2025, you can begin implementing the new holiday pay reforms.
Guidance can be found here:
Holiday pay and entitlement reforms from 1 January 2024 - GOV.UK
To clarify, the percentage-based method is the only acceptable way to calculate holiday entitlement for workers with irregular hours or part-year contracts.
With the additional method of paying rolled up holiday pay being re-introduced for these workers, do you need to start looking consulting and updating employment contracts if you are implanting this method from January 2025?
Irregular Hours and Part-Year Workers Definitions:
New regulations have been introduced to clarify how to calculate holiday entitlement and pay for these workers, with specific definitions to help employers identify and process them correctly.
Irregular Hours Worker
An employee whose contracted hours are mostly or entirely variable. This includes workers on casual or zero-hours contracts.
Part-Year Worker:
An employee contracted to work only part of the year, with unpaid periods of at least one week during the year.
Further clarification on Part-Year Worker from the Guidance
The regulations require that there must be a period of at least one week ‘for which they are not paid’ which means that it would still be possible for a worker to be paid ‘during’ that period so long as there is no expectation of them working in that period and nor are they receiving payment ‘for’ that period
This will therefore apply to many who work in the education sector for example.
Changes to accrual method
For leave years beginning on or after 1 April 2024, there is a new accrual method for irregular hour workers and part-year workers in the first year of employment and beyond. Holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period.
Changes to Relevant period and average pay calculation
The relevant period would run from the day before the worker starts their maternity or family related leave or time off sick, going back for 52 weeks. When calculating the average weekly hours worked, employers should not include weeks where the worker is on maternity or family related leave or off sick for any amount of time. However, weeks not worked for any other reason should be included. If the worker has not worked for the employer for 52 weeks, the relevant period is shortened to the number of weeks the worker worked for the employer, or extended to 104 weeks if available to establish the 52 weeks average.
*Reminder*
- The employer is required to perform this calculation once per period of leave.
- There will be no change to the method used to calculate entitlement.