Understanding the Changes to UK Holiday Laws: A Guide for Employers

The case of Harpur Trust v Brazel has significantly impacted UK holiday entitlement laws, leading to pertinent changes in how holiday pay is calculated for certain categories of employees. This case has prompted a re-evaluation of holiday entitlement regulations, particularly concerning the treatment of part-time and irregular workers.

In response to this legal development, UK holiday entitlement laws have undergone revisions to ensure fair and equitable treatment of employees in calculating their holiday entitlement and pay. Within this article, Croner will be discussing how these changes will impact employers of part-time and irregular workers. These changes are expected to come into place from 1st January 2024.

Irregular Hours/Part-Year Workers 

An irregular hours worker is classed as a worker whose number of paid hours worked in each pay period is wholly or mostly variable. A Part-time worker is a worker who is required to work only part of a year, and there are periods within that year of at least a week which they are not required to work and for which they are not paid.

Rolled-Up Holiday Pay Reinstated

One significant change is the reinstatement of rolled-up holiday pay, allowing employers to include a sum representing a worker’s entitlement to annual leave in their regular pay.

This is only applicable for irregular hours/part-year workers. Employers must ensure that the holiday pay is transparently delineated within the overall pay structure and clearly communicated to employees. RUHP is most common in sectors such as hospitality, seasonal work and social care. Employers must ensure that they do not use RUHP as a way to disincentivise staff from taking their entitled leave, the change is strictly to alleviate the administrative burden on employers.

Calculation Method for Irregular Workers

For irregular workers, the calculation of holiday entitlement will now be based on an accrual method of 12.07% of the hours worked in the pay period. This change is proposed to take effect from 1st April 2024. This change seeks to provide more equitable holiday entitlement for workers with varying work schedules, ensuring that they receive their fair share of annual leave based on their actual working hours. This will prevent employers from being forced to payout for 5.6 weeks of holiday for employees who may only work minimal hours each year.

Carryover of Holiday After Sickness or Maternity Leave

Employees will have the right to carry over untaken holiday entitlement after sickness or maternity leave.

This change aims to protect the rights of employees who may have been unable to take their holidays due to health-related reasons, ensuring that they do not lose out on their annual leave entitlement. The accrued leave must be taken within 18 months of the end of the holiday year in which the entitlement originally arose. This will helpfully limit the ability of employees who have been on long-term sick leave for many years to accrue a huge entitlement requiring payment on termination of employment.

COVID-Related Holiday Provisions 

Effective from 1/1/24, new COVID-related holiday provisions will come into place. This includes amendments to 'COVID carry-over leave,'. Employers should note that any ' carry over leave' must be taken by 31/3/24, and appropriate records must be maintained to track and facilitate this provision.

Record-Keeping

There has been a change in record-keeping requirements, with a focus on simplification. Previous legislation required employers to record the daily working hours of each employee. Employers will now only need to maintain ‘adequate’ records of weekly working time, streamlining the administrative burden associated with holiday entitlement tracking. It is imperative for employers to ensure accurate and comprehensive record-keeping in compliance with the revised regulations.

Changes to TUPE

Under the revised regulations, small businesses with fewer than 50 employees will have the opportunity to consult directly with employees during a transfer under TUPE. This will also apply to businesses of any size doing a transfer of fewer than 10. Employers of businesses will no longer need to elect a worker representative during consultation. This change aims to facilitate smoother transitions during business transfers, enhancing communication and transparency between employers and employees in the context of TUPE processes.

In conclusion, staying abreast of the confirmed changes to UK holiday laws is essential for employers to uphold legal compliance and effectively manage holiday entitlement for their workforce. By understanding and integrating these updates into their policies and practices, employers can foster a positive work environment while meeting their legal obligations toward holiday entitlement.

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