Rolled-up Holiday Pay Changes for Part-Year and Irregular Hours Workers

02 April 2024 | HR & Employment

Rolled-up Holiday Pay Changes for Part-Year and Irregular Hours Workers

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From April 2024, there will be a new employment law, allowing employees to be paid for “Rolled-up” holiday at the end of the financial year in specific circumstances. The law will only be available to part-year workers who are workers who have at least one week per year when they do not work and are not paid, and irregular hours workers.

What is Rolled-up Holiday Pay?

Rolled up holiday pay is a system by which employers pay workers an additional sum as part of their normal pay, instead of paying them when they take time off.

Paying holiday pay in this way reduces administrative costs and makes the calculation of holiday pay much simpler, particularly where the worker has atypical hours.

How does Rolled-up Holiday Pay work?

At present employers are not allowed to pay rolled-up holiday pay in any situation. This is because it was seen as a deterrent to workers taking holiday as they were not being directly paid for the holiday.  Instead, employers were only permitted to pay holiday pay at the time holiday was taken.

But, for holiday years beginning on or after 1 April 2024, employers will be able to pay rolled-up holiday to:

  1. Part-year workers who are workers who have at least one week per year when they do not work and are not paid, and
  2. Irregular hours workers, who are workers whose paid hours of work in each pay period are wholly or mainly variable.

This is to help simplify the calculation of holiday for these atypical workers.

How will Rolled-up Holiday Pay be calculated?

Employers will be able to pay rolled-up holiday pay by adding at least an additional 12.07% to the worker’s normal pay.  This represents the holiday pay they’ve earned during that pay period.  The holiday pay must be paid at the same time as the worker’s normal pay, and it must be separately and clearly itemised on their payslip.

If the employer doesn’t want to pay rolled-up holiday pay for part-year and irregular hours worker, then the method of calculating how they accrue holiday has changed.  For leave years starting on or after 1 April 2024, holiday will accrue on the last day of each pay period.  So, if a worker gets paid weekly, it is the last day of each week.  And, if they get paid monthly, it is the last day of each month.  The worker will accrue holiday at the rate of 12.07% of the number of hours worker in each pay period.  Where the accrued holiday includes a fraction of an hour, it will be rounded up if it is 30 minutes or more, and down if it is less than 30 minutes.

This calculation is for the statutory minimum of 5.6 weeks per year.  If an employee is entitled to more than the statutory minimum, the percentage used to calculate the accrual of their holiday will need to be increased accordingly.

A worker will continue to accrue holiday while they are on sick leave or other statutory leave, such as maternity leave, and their rolled-up holiday will be calculated on an average of the hours they have worked in the last 52 weeks.

What Should Employers do?

All employers need to review their current employment policies to ensure they incorporate the upcoming changes.  They should also train managers to make sure they’re up to speed on the new regime.

We help clients all over the UK with matters relating to Employment Law. Our team are experts in helping our clients figure out what their options are and how best to protect employees and employers from potential risk at times of legislation change. For more information on how we can help give us a call today on 0330 912 8338.

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Please note this article is provided for general information purposes only to clients and friends of Atkins Dellow LLP. It is not intended to impart legal advice on any matter. Specialist advice should be taken in relation to specific circumstances. Whilst we endeavour to ensure that the information in this article is correct, no warranty, express or implied, is given as to its accuracy, and Atkins Dellow LLP does not accept any liability for error or omission.

© Atkins Dellow LLP 2022

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