Before a ruling by the Supreme Court in the Harper Trust case in July 2022 it was widely accepted, even included in ACAS guidelines that a calculation of 12.07% (5.6 of the 46.4 weeks worked per year) would give employers a pro-rata amount of holiday and holiday pay for part year workers hours.
In 2022 the Supreme Court ruled that this put part year workers (for example those who work term time and irregular hours) at a disadvantage and they were therefore entitled to 5.6 weeks holiday pay per year, regardless of not working a full year.
Much teeth gnashing by HR professionals everywhere was done! Holiday pay was to be worked out as an average over a reference period of 52 weeks before the holiday was due to be taken. Only counting weeks where work was undertaken. Therefore data from up to 104 weeks before the holiday could be considered to gain the 52 weeks needed. (…you may need to read that twice….or three times!)
Since then there has been much head scratching trying to work out how much holiday and holiday pay part year workers should get. (I mean how can someone who only worked an average of 4 days a week for 2 weeks in a year be entitled to 22.5 days paid holiday?)
This week the government has responded to a number of reforms to retained EU employment law which includes holiday pay for part year workers. Guess what? That’s right, we’re going back to the old system!! In our view this is the fair and correct decision….not often we say that about government decisions at the moment…!
Although we’re not totally sure when yet as 1 January 1 and April 2024 have both been given as dates of implementation, accrual of annual leave for part year workers will be worked out as 12.07% for hours worked at the end of each pay period. We and we couldn’t be happier…for us working the sums out or our clients!
Another big change is the re-introduction of rolled up holiday pay (which has been technically unlawful since 2006). Meaning that with each pay packet employers will be able to pay the proportionate amount of holiday pay against worked hours then and there, rather than waiting and paying it when people take holiday. Great news for some employers who have workers with very irregular hours.