As well as simplifying calculations, the government will allow “rolled-up” holiday pay to be paid, enabling employers to include an amount for holiday pay on top of the hourly rate in regular pay packets. This helps ensure that short-term staff get their holiday pay.
Today’s announcement from the government is part of its response to two consultations on holiday pay and retained EU employment law.
The government will legislate to provide much-needed clarity for agencies and workers on the correct method to calculate and pay holiday pay. It said holiday pay entitlement should be 12.07% of hours worked in a pay period for irregular hour workers and part-year workers in the first year of employment and beyond. Other workers will continue to accrue annual leave in their first year of employment as they do now by receiving 1/12th of the statutory entitlement on the first day of each month and to pro-rate it thereafter.
REC Chief Executive Neil Carberry said:
“We strongly support today’s announcement because it recognises that our labour market relies on people who choose to work in different ways. Making sure employers can easily comply with the law and workers get their holiday pay is important - and today’s changes deliver that.
“The REC argued for more clarity for employers in how they calculate accrued holiday pay and so plans to set a method in stone via legislation in the new year will help. There are more than four million workers who have a completely irregular, non-repeating working pattern and that needs to be recognised by enacting further reform of the Working Time Regulations so they better reflect modern ways of working. The law must enable different forms of contracts, not hammer them into one form.”