Rolled Up Holiday Pay choice for Employers

For holiday years starting on or after 1st April 2024, Employers will be permitted to calculate annual leave entitlement as 12.07% of the hours worked in a pay period for irregular hours workers and part-year workers in the first year of employment and beyond. This does not apply to workers with regular hours who continue to accrue as 1/12th of the 5.6 weeks entitlement for each month or part month.

Also employers will have the option to operate Rolled-up Holiday Pay (RHP) for the same cohort based on 12.07% of all earnings (including overtime and other pay allowances) within that pay period.

So who does this apply to?

Irregular Hours and Part Year Workers

Irregular hours workers and part-year workers are now defined in new regulation 15F of the Working Time Regulations (WTR), which is inserted by statutory instrument for operation for holiday years starting on or after 1st April 2024.

The instrument also introduces a method to calculate how much leave is accrued when irregular hours workers and part year workers take maternity leave or other family related leave (which will be defined as ‘statutory leave’). Employers will be able to look back over a 52-week reference period to calculate an average of hours worked across that period.

Employers would need to include weeks not worked and not on statutory leave, so that the amount of accrued leave is now proportionate to the time worked. This changes the position from the April 2020 changes to the employment rights act which excluded zero pay weeks).

New option for Rolled-up Holiday Pay (RHP)

Also for holiday years from 1st April 2024 Employers will additionally be permitted to calculate the holiday pay for irregular hours workers and part year workers using Rolled-up Holiday Pay (RHP) should they choose and wish to.

Workers will not be able to request that they receive RHP. It will be the employer’s choice whether to use RHP, continue to use a reference period for calculating annual leave, or to offer both.

If employers choose to use RHP, they will be required to calculate a worker’s holiday pay as 12.07% of the worker’s total earnings within a pay period. They would not calculate RHP by calculating 12.07% of a worker’s normal remuneration and basic remuneration separately.

The employer will be required to pay the worker with each pay day, rather than when the leave is taken as had previously been required under European case law, and employers must clearly mark RHP payments as separate items on each payslip.

PAYadvice will shortly update its Holiday Pay resources to reflect these additional new and revised rules:

PAYadvice.UK 9/11/2023 update to reflect Reg 15B reference to holiday years starting on or after 1st April 2024. Last updated 16/11/2023

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