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In the run-up to the 2024 holiday period, we set out below an overview of several significant changes which have been implemented by the Government this year (2024) in relation to holiday entitlement and pay. The Government has updated its guidance in relation to statutory holiday rights, following two consultations which were undertaken in 2023. The intention has been to clarify some previously unanswered questions and areas of uncertainty, for example in relation to part-year workers and those with irregular schedules of work.
Generally, all workers are entitled to a minimum of 5.6 weeks’ paid annual leave per year, (i.e. 28 days for full-time workers) (Working Time Regulations 1997, as amended). Workers have this amount of leave in each ‘leave year’. The leave year is usually specified in the contract but, if not, it starts, (in the case of workers who started work on or after 1 October 1998) on the date that employment started and each successive anniversary. Leave can be pro-rated in the first and last year of employment.
Part-time workers are entitled to the same 5.6 weeks’ leave as their full-time colleagues, but based on the number of days which they work per week. For example, someone who works 3 days a week is entitled to 16.8 days holiday per year (5.6 x 3).
The position with regard to part-year workers and those who work irregular hours is more complicated.
Paid holiday entitlement for Irregular Hours and Part year workers
The calculation of holiday pay for staff with unpredictable hours (for example, zero-hours workers) has previously been complex. The new regulations aim to simplify matters. Irregular hours and part-year workers will accrue annual leave at a rate of 12.07% of hours worked in the previous pay period.
Employers can use a ‘roll-up’ method to calculate holiday pay for part-year and irregular hours workers. This involves paying workers their holiday pay upfront, together with their regular pay (rather than accruing holiday pay throughout the year).
The holiday pay must be itemised separately on the worker’s payslip, and it is still important that these workers still take at least 5.6 weeks of annual leave per year. Employers should note that this is not lawful for workers who work regular hours.
Extended carry-over provisions for family-related leave
Up to 5.6 weeks of unused annual leave due to family-related absences can now be carried over to the next holiday year. This applies, for example, to parental leave or leave taken in caring for dependants.
Provisions for workers on long-term sick leave
Previously, unused annual leave due to long-term sickness could only be carried over for one year. The new regulations provide that four weeks’ annual leave can be carried over, but the carried-over leave must be used within 18 months of the end of the holiday year in which it accrued. This will need to be carefully monitored and recorded.
Carry-over of leave in other situations
Workers are able to carry-over 4 weeks of annual leave if they have not had a reasonable opportunity to take leave. Any leave carried-over in these circumstances will only stop being carried-over once a full year has elapsed where the worker has taken holiday and been paid for it correctly.
In addition, the new regulations provide for carry-over if an employer fails to advise workers that untaken annual leave will be lost at the end of the leave year.
A key point for employers to remember is that holiday regulations apply to all workers, and not just to employees.
Employers should ensure that up-to-date policies are in place which reflect these recent developments and that communication has been made to workers outlining how holiday entitlement is managed. For example: