In the latest legislative updates, this spring has seen significant changes to employee holiday rights and pay, as directed by the Government. These adjustments are a continuation of efforts to refine employment rights through both European and UK case law developments. Understanding these changes is crucial for employers to maintain compliance and operational efficiency.
Patrick Glencross, Senior Associate at Furley Page, a distinguished law firm in the south east, offers his expertise on the matter. “The reforms primarily simplify the existing framework around holiday entitlement and the calculation of holiday pay under the Working Time Regulations,” Glencross explains.
Employers must note several key updates:
- Definitions for ‘irregular hours worker’ and ‘part-year worker’ have been introduced, affecting workers whose paid hours vary or who work only part of the year, such as term-time employees.
- A revised method now exists for accruing holiday entitlement in hours for these workers, set at a minimum rate of 12.07% of actual hours worked during any pay period.
- Changes have also been made to how holiday entitlement is calculated during periods of sickness, maternity leave, or other family-related absences for irregular hours and part-year workers.
- The option to issue ‘rolled-up holiday pay’ for these workers is now available.
- There are new regulations confirming the right to carry over holiday entitlements under certain conditions and clarifying the inclusion of regular overtime and commission in holiday pay calculations.
While these changes streamline some processes, the landscape of holiday rights remains intricate. “Accurately calculating annual leave and holiday pay, particularly for employees with irregular working patterns, poses a significant challenge,” Glencross adds. He advises employers to act proactively to ensure compliance and avoid potential contractual breaches.
Recommended steps for compliance include:
- Identifying employees who fall into the new categories of irregular or part-year workers.
- Reviewing and updating how payments such as overtime and commissions factor into holiday pay calculations.
- Amending policies, contracts, and practices to align with the new regulations.
- Adjusting payroll systems to accurately process holiday hours accrual.
- Ensuring that payslips clearly reflect rolled-up holiday pay where applicable.
- Implementing reminders for employees to utilize their holiday entitlement timely.
These measures will equip businesses to effectively navigate the updated regulations, safeguarding against legal challenges and fostering a compliant work environment.
