You may recall that in July 2022 the Supreme Court issued its’ decision in the case of Harpur Trust v Brazel regarding the correct calculation for holiday pay for staff with irregular working patterns. The decision ruled that staff who are only contracted to work for part of the year e.g. seasonal or term-time workers should receive the same statutory holiday entitlement as employees who work the full year i.e. 5.6 weeks holiday paid at the rate of their average weekly earnings.
The Government has decided to reverse the decision in Harpur Trust v Brazel and will reintroduce the calculation of 12.07% of hours worked in a pay period as the way of calculating holiday for staff who work irregular hours e.g. zero hours workers or on part-year contracts.
An irregular hours worker is a worker whose number of paid hours worked in each pay period is wholly or mostly variable (a pay period is how frequently a worker gets paid e.g. monthly)
A part-year worker is a worker who is required to work only part of a year and there are periods of at least a week during which they are not required to work and for which they are not paid
It will also be possible to pay these workers rolled-up holiday pay instead of ensuring that they take their leave, however this will not be lawful for full-year workers or those with regular hours.
In calculating a week’s pay, average salary over the last 52 weeks worked, regular overtime payments and performance-based commission should be included.
Changes to holiday calculations for staff who work irregular hours or on part-year contracts will apply to holiday years commencing on or after 1 April 2024. For holiday years starting prior to 1 April, existing rules will continue to apply.
Before implementing these changes we recommend auditing how many staff are affected by these changes and what their contracts of employment state regarding holiday pay calculations.
Holiday carry over
The Government has also confirmed that staff should be able to carry over annual leave if they are unable to take it due to maternity leave, family-related leave or sick leave. Leave carried over in these circumstances must be taken within 18 months of the holiday year when it was accrued.
Since Covid-19 workers have been able to carry over leave they were unable to take into the following two leave years. From January 2024 workers can no longer accrue covid-related carry over leave. Any leave accrued prior to 1 January 2024 must be used by 31 March 2024.
If you have any questions regarding calculating holiday pay for your staff please contact firstname.lastname@example.org
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This post was written by SKHR