The Working Time Regulations 1998 (WTR), which set out workers’ legal rights in respect of holiday, have recently been amended with effect from 1 April 2024.
Who do these changes to the WTR apply to?
These amendments apply only to “atypical workers” i.e. irregular hours workers and part-year workers.
- An irregular hours worker is a worker whose contractual hours are “wholly or mostly variable” in a given leave year.
- A part-year worker is a worker who is required to work for only part of the leave year, and there’s a period of at least a week in that year which they’re not required to work and for which they are not paid.
The changes to the WTR therefore apply to most workers on zero-hours contracts, other casual workers, gig-economy workers and part-year workers who aren’t paid during periods they’re not required to work.
What are the changes under the WTR?
In summary, the amendments to the WTR, which apply to holiday years starting from 1 April 2024 onwards, have created new rules for atypical workers as follows:
- A new method of calculating annual leave has been introduced.
This is known as “an accrual method” and the WTR as now amended provide that this can be calculated in hours rather than weeks and accrues on the last day of each pay period at the rate of 12.07% of the actual hours worked in that pay period, rounded up or down to the nearest hour.
Arguably this change to the WTR provides more clarity to both employees and employers as to the correct approach and calculation of holiday entitlement.
- Payment of rolled up holiday pay is now permissible.
Whilst a number of employers have been paying its atypical workers “rolled up holiday pay” (i.e. including an amount for holiday pay on top of a worker’s normal hourly rate, paid at the time they perform the work, rather than when they are on holiday) prior to this change to the WTR, they now have peace of mind that this is now lawful practice. Prior to these changes, the technical letter of the law had been that holiday pay must be paid at the time that holiday is taken, but this is no longer the case in respect of atypical workers.
This will therefore no doubt be a welcome change for employers who engage atypical workers. However, it is always advisable that pay slips clearly identify the amount of pay during the pay period that represents the rolled up holiday pay so that there is no confusion as to what elements of the worker’s pay is wages and what element constitutes the holiday payment.
The changes to the WTR also provide for new and more generous rules as to carry over of holiday entitlement.
Despite these welcome changes which provide some clarity as to holiday entitlements for atypical workers, navigating these rules in practice can still be a tricky exercise, and the current law on holiday entitlement generally still remains complex.
If you require any assistance regarding the calculation of holiday pay for atypical workers or more generally, we have a number of employment specialists at Glaisyers who would be more than happy to assist you. Please don’t hesitate to get in touch at employment@glaisyers.com.
Find out more legal insights here!
