In January this year, the UK government updated the Working Time Regulations to introduce new rules aimed at clarifying, and in some areas to changing, workers’ rights to take holidays and be paid for them. Below we look at some of the most important features of the new regime.
Who is entitled to paid holidays? Almost every ‘worker’ has this right. Workers comprise employees but also other individuals who provide services personally, such as agency workers. Every worker is entitled to 28 days (5.6 weeks based on the traditional working pattern) per year and there is no minimum service requirement. That total can include any public holidays you recognise if workers are paid for them. You can decide when your holiday year starts and ends.
How do I calculate the entitlement of someone who works an irregular pattern? Nowadays many workers’ pay varies with the amount of work they do or when they work, or their hours themselves are wholly or mainly variable, or they only work and are paid for certain parts of the year. For those ‘irregular hours’ workers, specific rules now explain how to calculate their entitlement. Essentially this will be 12.07% of the hours they work in each period they are paid for (that figure being the percentage of a whole year made up by 5.6 weeks), so that leave is accrued in arrears as you go along. Holidays should be calculated as hours, and rounded up or down to the nearest hour.
What pay should a worker receive when on holiday? This depends on how the individual normally works and is paid:
• If they work regular hours, or are paid the same irrespective of hours worked, the calculation is simple and will include normal wages or salary, plus any regular payments now specifically listed, such as commission personally earned, regular overtime and increments relating to the person’s status, seniority or qualifications. Technically those additional sums only need to be reflected in the first 20 days of annual leave paid, although most employers are expected to extend them to the full 28-day entitlement.
• The pay for irregular hours workers should now normally be calculated in one of two ways. They can be paid when holidays are taken, but you will need to calculate a rate to pay them each time. This will be the average hourly rate they have received over the last 52 working weeks (or their period of service if shorter). Alternatively, it is now expressly lawful to provide ‘rolled up’ holiday pay, which involves adding a separately itemised figure of 12.07% to the pay earned in each pay period. This accounts for holidays as they are earned and no further payment is necessary when the leave is taken.
Can a worker carry over untaken holidays from one year to the next? There are now explicit rules for carry-over of annual leave. If the worker was unable to take holidays because they were on ‘statutory’ leave (maternity and other family-related leave) they can carry any untaken holidays into the next leave year. If they were unable to use their holidays because they were ill, they can be carried forward for 18 months. And workers are protected against losing their holidays if you fail to recognise their entitlement to take leave, won’t give them a reasonable opportunity or encouragement to take it, or don’t make sufficiently clear that any time not taken before the end of the leave year will be lost. Regular hours workers may only carry forward four weeks in some of those scenarios whereas irregular hours workers are fully protected.
Finally, it should be noted that the above rules apply in leave years beginning on or after 1 April 2024. For earlier leave years, the rules which apply are essentially a hybrid of the ‘old’ rules and the new.
For more information contact:
Brian Campbell
Legal Director in the Employment and Immigration team at Brodies LLP
brian.campbell@brodies.com
0141 245 6222
