Holiday Pay: Our Tools To
Support You
New regulations on holiday pay and entitlement came into force on 1 January 2024.
The new rules were expected to reverse the outcomes of the Supreme Court’s decision in Brazel v Harpur Trust (2022). However, the position is not as simple as employers hoped. We can help you work through the regulations and practical implications for your organisation.
Can we now pro rata leave for part year and irregular hours workers?
Yes, if they fall within the specific definition in the new regulations. However, this definition won’t apply to all part-year and irregular hours workers. For holiday years that begin on or after 1 April 2024, it’s important that employers understand who this applies to and ensure that they’re compliant in how they deal with holiday accrual and pay.
What else do I need to know?
The regulations clarify when all workers can carry holiday over from one leave year to the next and provide a new definition of “normal pay” (which applies to all workers). There is also an ability to roll-up holiday pay for this defined group, subject to some specific conditions. Employers should be reviewing their contracts and payment processes to ensure they’re setting out what payments need to be included in holiday pay and providing for carry over of leave properly.
Sounds simple – is it?
Unfortunately not as simple as employers hoped for.
The government’s holiday pay guidance accompanies the regulations and contains calculations which are at odds with the legislation. This means that employers should be careful about relying on the guidance too heavily. Employers must ensure that they put in place arrangements which calculate holiday pay and entitlement in a legally compliant way, whilst also ensuring they can meet the practical implications of that.
Employers who didn’t adjust their holiday accrual arrangements post-Brazel are not necessarily going to be compliant. The risk of backdated claims being made is increased following 1 April. Those who did make adjustments may need to make some more because the definitions and rules around this issue has changed.
Added to this, if an employer wrongly classifies a worker and, for example, rolls up their holiday pay, there are potentially costly liabilities which will cross over different holiday years.
We can help.
We strongly recommend that all employers who use part-year or irregular hours workers review their holiday arrangements.
We can help you work through these issues. For a fixed-fee of £1500 plus VAT, we will provide you with:
- A briefing call to understand which workers this relates to and what your current arrangements are
- A review of the holiday pay clauses for those workers
- A comprehensive guidance note answering key questions about the new rules, including example calculations and flowcharts
- A bespoke report which sets out: - Analysis on who is a Regulation 15F worker and who is not - Options and a risk-based approach where there are uncertainties - Clarity on the steps you need to take to be compliant with the new rules - Suggested amendments to your contracts of employment - Advice on the risk of any back-dated claims and how to mitigate these.
This will help you understand the implications for your organisation, how to manage risk and will support further conversations with your Board, staff or unions.
Please get in touch for more information:
