DBT publish new guidance on Simplifying holiday entitlement and holiday pay calculations

How holiday pay and entitlement has changed from 1 January 2024.

The Department for Business and Trade has published new guidance on Monday 1st January 2024 on the changes to holiday pay.

This guidance sets out forthcoming changes to the Working Time Regulations which will affect:

This new guide sets out the changes to the Working Time Regulations which the government introduced on 1st January 2024.

The government has introduced reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations.

These changes include:

removing the Working Time (Coronavirus) (Amendment) Regulations 2020 which affect the accrual of COVID-19 carryover of leave (see section 4.1)
maintaining the current rates of holiday pay where 4 weeks is paid at normal rate of pay and 1.6 weeks paid at basic rate of pay, whilst retaining the 2 distinct pots of leave (see section 5.1)
defining what is considered ‘normal remuneration’ in relation to the 4 weeks of statutory annual leave (see section 5.1)

The following reforms apply to leave years beginning on or after 1st April 2024:

defining irregular hours workers and part-year workers in relation to the introduction of the holiday entitlement accrual method and rolled-up holiday pay (see section 2)
introducing a method to calculate statutory holiday entitlement for irregular hours and part-year workers (see section 3.1)
introducing a method to work out how much leave an irregular hour or part-year worker has accrued when they take maternity or family related leave or are off sick (see section 3.4)
introducing rolled-up holiday pay as an alternative method to calculate holiday pay for irregular hours workers and part-year workers (see section 5.2)