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Friday, 19 January 2024 11:40

Common Sense at Last for Part-Time Holiday

The recent proposal to revamp how holiday pay is calculated for irregular part-time workers in the UK reveals a chink of common sense at last in the way Government thinks about legislation. The need for reform arose following the 2019 case of Harpur Trust v Brazel which resulted in a ruling that workers on part-year contracts with irregular hours must receive the full statutory minimum 5.6 weeks’ paid holiday entitlement per year.

Without boring you with the detail, the result was that part-time workers with irregular working patterns would be entitled to proportionately more paid holiday than permanent full-time staff or part-time staff who worked regular hours. Clearly a nonsensical, and at face, unfair arrangement. But one that the Supreme Court ruled was just, in July 2022.

The blatant unfairness of the court ruling spurred the Government into action, and now, 18 months on, legislation to rectify the situation is on the verge of being implemented. For holiday years commencing after April 1 2024, employers will be able to “roll-up” holiday pay for irregular workers into their hourly rate.

The roll-up method of calculating holiday pay used to be fairly common practice. It’s an easy and workable solutions and makes sense because if an employee doesn’t want to do work for you for a period of time because they are going away or because they just want a break, then they just have to say no thanks and they don’t work. Their holiday pay has already been paid.

The calculation for rolled-up pay is simply to increase workers’ pay by 12.07%; assuming a statutory holiday allowance. So effectively, every time an employee does any work, the employer is simply adding in their holiday pay at that time.

The 12.07% rule is a straightforward and simple solution, but because of the Supreme Court ruling, businesses have been left in doubt, and we’ve had an obligation to advise organisations on the correct legal calculation to make sure they would be on the right side of any tribunal cases should they arise.

There has been not insignificant opposition to the implementation of the legislative changes. The most pressing of concerns is the potential for workers to lose track of their actual holiday entitlement. With pay rolled up into their regular wages, there's a risk that workers might not take the leave they're entitled to, leading to burnout and a work-life imbalance. This concern is particularly relevant in sectors where part-time and irregular work is common, like retail or hospitality.

There is also a fear that workers will deliberately forgo their holiday entitlement as they see more benefit in earning an enhanced wage than taking their holiday. However, under the Working Time Directive, there is a legal responsibility for employers to ensure their workers are taking the requisite amount of leave, as failing to do so could lead to legal challenges.

Clearly the changes will require employers to educate their staff about how their holiday pay is being calculated and integrated into their regular wages, and the necessity for staff to take their holidays for both legal and wellbeing reasons.

Whilst the change seems a relatively small one, we should not undersell some significant implications. We mustn’t, for example, lose sight of the need for ongoing dialogue and education to ensure that the rights and wellbeing of workers are safeguarded, while also supporting the operational needs of employers.

As with any major policy shift, its success will largely depend on its implementation and the collaborative efforts of all stakeholders involved. If you have any questions or queries regarding this or any other HR or Employment Law issue, we’re here to help as usual on 01452 331331 or email This email address is being protected from spambots. You need JavaScript enabled to view it. 

  

Read 702 times Last modified on Monday, 22 January 2024 16:17

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