Over the next week, we will provide you with a series of short blogs on the key employment law changes that will be introduced at the beginning of next month. This blog will specifically focus on the changes to law in relation to annual leave and holiday pay that are due to come into force on 1st April 2024. This is the fourth blog in our series; please find the blogs on other upcoming changes here.
Starting from 1st April 2024, workers with irregular or part-time yearly schedules will earn holiday leave gradually, meaning that workers will not get their full holiday entitlement at the start of the year. Instead, they will earn their holiday time as they work throughout the year.
For every hour they work in each pay period, they will get holiday time equal to 12.07% of those hours, but not more than 28 days in a year.
Rolled-up holiday pay has long been a term which was frowned upon by some but welcomed by others. This is where those who work irregular hours receive this 12.07% as a payment (sometimes monthly but often quarterly) rather than receiving pay when taking annual leave.
Often, this was considered something of an outlier in terms of holiday pay, not attracting claims but sitting in something of a grey-area in terms of legislation. The new legislation is expected to allow this practice to be adopted in respect of those who work irregular hours.
What employers need to consider:
- Work out if you have any workers within your business that could be considered as a part-year or irregular hours workers;
- Decide whether you wish to pay rolled-up holiday pay to any such individuals;
- Ensure that your workplace is ready to administer this new system of accrual and pay. This could include informing staff that deal with the Payroll of the upcoming changes and making sure the correct payroll functions are in place to accommodate the changes;
- Review any holiday policy in place; and
- Consider whether you need to issue revised terms and conditions of employment to reflect these changes.
Arguably, there are some challenges with this new system in this place, It’s not yet clear how employees with these flexible work hours will arrange their holidays. However, this change may make it easier to calculate annual leave for those who work irregular hours.
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