Holiday Pay Changes 2024: Irregular Hours Workers
The calculation and administration of holiday and holiday pay for casual, zero hours and irregular workers and employees has been historically challenging, resulting in necessary holiday pay changes for 2024.
Due to the uncertainty over working patterns and the fact that workers often make themselves available for work when they want to, it has been difficult to accurately calculate how much employees have accrued and when they take holiday. The 2022 Supreme Court decision in Harpur Trust v Brazel sought to clarify the law but potentially made the practicalities of managing holidays even harder.
Some of the difficulties and uncertainties may be resolved by holiday pay changes 2024, which are legislated through the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023.
This new legislation brings in several changes to the function of holiday and holiday pay. For ease, in this article, we are seeking to only focus on the significant changes being made in respect of casual and zero-hours workers/employees.
The legislation brings in two new types of workers/employees. They are:
- Irregular hours workers. These are defined as being “any worker whose number of paid hours in each pay period during the term of their contract in a leave year is, under the terms of the contract, wholly or mostly variable”.
- Part-year workers. These are defined as “any worker who, under the terms of their contract, is only required to work part of a leave year in circumstances where there is a gap of at least a week in which they are not required to work and are not paid”.
The definition of irregular hours workers seeks to cover casual and zero-hours workers—those people whose amount and patterns of work fluctuate throughout the year.
Holiday Pay Changes 2024
The new legislation sets out that from the next holiday year, commencing on or after 1 April 2024, holidays will accrue and be paid in a markedly different way to employees with fixed and or regular hours.
For those employees and workers deemed to be irregular hours workers and part-year workers holiday will accrue at the rate of 12.07% of the hours worked in a particular pay period (usually weekly or monthly).
As part of these 2024 holiday pay changes, employers will have the ability to choose to then pay the additional hours as rolled-up holidays to the employee/worker. The effect is that the workers will receive additional holiday pay but will not then take specific time off as paid holiday.
It is anticipated that this may simplify matters for employers and potentially workers.
The new definitions of classes of workers need to be carefully considered and existing contracts will need to be carefully examined to determine if they apply. There is some uncertainty over how “mostly variable” will be interpreted and how much variation is necessary.
When do the Employment Rights Regulations 2023 come into effect?
These holiday pay changes in 2024 come into force for leave years commencing on or after 1 April 2024. As such, for employers operating leave years commencing in January 2024, the changes will instead apply for the holiday year starting in January 2025.
For those employers who employ/engage casual, zero hours or irregular workers we would recommend the following action is taken:
- Check when the holiday year starts. If it starts on or after 1 April 2024 then action will need to be taken soon.
- Assess whether any of the workforce fall within the definition of either irregular hours workers or part-year workers.
- Speak with the relevant workers/employees.
- Consider updating contracts of employment and holiday policies so that they fall in line with changes.
- Make sure payroll systems and providers are in place and updated to deal with the changes.
Hopefully this article goes some way to explaining the holiday pay changes happening in 2024, but if you need further support then please contact GA’s experienced employment team by calling 01752 203500 or email me directly via robert.zacal@GAsolicitors.com.
You can also view a recent article about the Neonatal Care (Leave and Pay) Act 2023 here.
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