Changes to Holiday Pay for Irregular Hour Workers
The government has published guidance outlining how holiday pay should be calculated for part year and irregular hour workers from 1 April 2024. This guidance can be found here.
Harpur Trust v Brazel
The Harpur Trust v Brazel ruling in 2022 stated that all workers, regardless of how many hours they worked over the year, were entitled to 5.6 weeks of holiday per year. This judgment clarified that this entitlement could not be pro-rated, and made illegal the method of using a 12.07% multiplier to calculate holiday for atypical workers.
As a result of this judgment, part year workers were entitled to a greater holiday entitlement than part-time members of staff who work the same number of hours over the course of the year. The Harper Trust v Brazel ruling had a particular impact on the education sector where it is standard practice to employ term time-only workers who, although they are under contract for a full year, will only work for a few weeks on variable hours around exam times, such as exam invigilators or music teachers. In this scenario, even if an employee works just one week in a year, they would still be entitled to 5.6 weeks of paid holiday at the same rate of pay as the one week that was worked. The new regulations seek to address this anomaly.
What is changing?
Under new regulations effective as of 1 April 2024, rules for calculating holiday entitlement and pay for irregular hours and part-year workers, such as zero hours workers and term time workers, will change in the following ways:
• Annual holiday entitlement is accrued on the last day of each pay period at the rate of 12.07% of hours worked during that period (up to a maximum of 28 days per year).
• Rolled-up holiday pay will be permitted again – for irregular hour and part-year workers only - at 12.07% of all pay for work done. It must be paid at the same time as pay for the work done and set out separately on the payslip.
What is rolled-up holiday pay?
“Rolling up” of holiday pay involves spreading accrued holiday pay over the year by paying it monthly in addition to an employee’s hourly rate, as opposed to requiring an employee to take their holiday. This practice had previously been ruled unlawful, as it was considered that it might dis-incentivise workers to take annual leave.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.