Lawyers for Holiday Pay Claims & Audits

Following the end of EU supremacy over domestic law, there have (amongst others) been recent changes to the Working Time Regulations.  These changes will impact upon holidays, including how holiday pay is calculated for those working irregular hours and when and how holidays may be carried over.

Most workers have the right to 5.6 weeks’ paid leave (equating to 28 days’ for full-time employees).  Some employees will also receive additional holiday rights under their individual contracts of employment. For those who work regular hours and receive a set salary, the calculation of holiday pay is relatively straightforward. However, for employees who work irregular hours or regularly receive commission or bonus payments, it can be a somewhat more complicated procedure to work out their holiday pay.

As an employer, the law can often be difficult to navigate, and it is all too easy to unwittingly miscalculate your employees’ holiday pay, or to mistakenly deny workers the right to carry forward any unused holiday. Mistakes like this can leave you exposed to a potential employment tribunal when your employees seek to claim back what is owed to them.

Here at Analysis Legal our team is fully up to date with all of the relevant employment legislation, enabling us to provide you with the right assistance to ensure that your business is operating lawfully. Our clients trust us to help them navigate the complex legalities of various employment regulations such as the Working Time Regulations, the Employment Rights Act, and the Working Time Directive.

If you’d like to find out more about how we can help your business to be fully compliant with the law, freeing you up to focus on the day-to-day business operations, please don’t hesitate to contact us and speak to one of our highly qualified and experienced employment law solicitors today.

What are the Changes to the Working Time Regulations for Part-Year and Irregular Hours Workers?

For leave years starting on or after 1 April 2024, all workers, including part-year and irregular hours workers, will be entitled to 5.6 weeks of statutory annual leave (or the equivalent pro-rata entitlement), accrued in proportion to their working time. The new regulations have introduced a method of calculating holiday entitlement accrued by part-year and irregular hours workers, this is worked out at 12.07% of the actual hours worked in a defined pay period. If the worker’s contract states that they are entitled to more than the minimum 5.6 weeks of annual leave, the accrual percentage may be different.

Can Employers Pay Rolled-up Holiday Pay?

Yes, for part-year and irregular hours workers only. Rolled-up holiday pay was previously unlawful.  However, under the new legislation, employers can opt to pay rolled-up holiday pay to such workers.  This can be done by by paying an uplift of 12.07% to the worker’s usual hourly pay rate for work done in each pay period.  It can be paid at the time the work is undertaken, rather than at the time of the holiday being taken.  The Government has a handy on-line holiday ready reckoner tool to assist with any calculations.

This change applies to leave years starting on or after 1 April 2024.  For further advice on whether rolled-up holiday pay is suitable for your business, as well as the pros and cons of adopting this practice, please speak to one of our team who will be happy to assist you.

Do The Changes Have An Impact On Arrears Claims for Irregular Hours and Part Year Workers?

Until the limitation period is reached, it is still possible for irregular hours and part-year workers to claim in respect of historic underpayments of holiday pay. In Great Britain (excluding Northern Ireland) tribunals considering claims based on a series of deductions can take into account the two years prior to the date of the complaint when a claim is being quantified. There are limited circumstances in which the rolling two-year claim period could be extended, but in the majority of cases it is unlikely.

Can Workers Carry Holiday Entitlement Over To The Next Leave Year?

Employers can voluntarily allow workers to carry over unused holiday entitlement should they choose to do so.  Under the new legislation there will also be limited circumstances where a worker can carry over their statutory leave entitlement to the next leave year e.g. if the employee is unable to take the full four weeks off due to being on sick leave (subject to time-limits), or family-related leave (e.g. maternity or other family-related leave).   Workers can also carry over holiday where their employer fails to recognise their right to annual leave or paid annual leave; if their employer has not given them a reasonable opportunity to take leave or encouraged them to do so; or where the employer has failed to inform the worker that leave not taken by the end of the year will be lost.  In these circumstances, holiday can be carried over to the end of the first full leave year where there has been no such failure on the part of the employer.

It can be tricky to navigate the law regarding holidays and holiday pay so please do not hesitate to contact us should you require specialist advice tailored to your organisation.