Holiday Entitlement from April 2024

Yet again we have a tinkering of the rules regarding holiday pay in the seemingly forlorn hope for simplification. Basic holiday entitlement hasn’t changed. Employees are still entitled to 5.6 weeks holiday per annum and the changes apply to those workers who have no set hours or work irregular hours.

One little known aspect of holiday pay that is set to be maintained is the definition of holiday pay. The law as it stands differentiates between normal holiday pay (Regulation 13) and basic holiday pay (Regulation 13A). Under Regulation 13 an employee is entitled to 4 weeks at their normal daily rate (this includes overtime, regular bonus payments etc.), whereas Regulation 13A relates to the addition of 1.6 weeks holiday as the employee’s basic rate of pay.

HMRC have now confirmed that the holiday entitlement reforms introduced from 1 January 2024 will only apply to those companies whose holiday year starts post 1 April 2024. This means that if your holiday year starts the 1 January 2024 you will have to wait until January 2025 to apply these new rules to your employees.

HMRC have introduced a new regulation 15(B) for irregular hour workers and part year workers, this includes casual workers and/or some agency workers.

Assuming your holiday year starts on 1 April you will now be able to calculate holiday entitlement / pay in one of two ways:

• Holiday calculated using the 52-week average as currently being calculated.
• Paid as rolled up holiday pay with an uplift of 12.07% for the work done by the worker in each pay period. Under this method workers receive holiday in each pay period so any holiday they take at a later date has already been paid. Employees cannot accrue holiday pay under this method.

Calculations of a week’s pay under the new regime.

The definition of a week’s pay has been amended to state:

• Payment includes commission payments that can be linked to performance tasks.
• Payments of professional or personal status relating to the length of service
• Payments such as overtime which has been regularly paid to a worker in the 52-week reference period.

The points above apply to regulation 13 and regulation 15(B)workers but do not apply to regulation 13(A) workers.

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