Government responds to part-year worker holiday entitlement consultation

Background

Following last year's Supreme Court judgment in the Brazel case, the Government consulted on proposals to reform holiday entitlement for part-year workers. The consultation sought views on a proposal to introduce a 52-week holiday entitlement reference period for part-year and irregular hours workers. The aim of the proposal was to ensure holiday entitlement is directly proportionate to the time a part-year or irregular hours worker spends working.  

Consultation response

The Government has now published its response to the consultation. The response confirms that the Government will proceed with legislation to introduce a pro-rata mechanism to calculate part-year workers' holiday entitlement. However, in light of concerns raised about the administrative burden of the original proposed 52-week reference period, the Government has confirmed it will pursue an alternative, more straightforward approach.

Reform

The Government has brought forward draft regulations to achieve the following:

• Introduce an accrual method to calculate holiday entitlement for part-year, irregular hours workers and agency workers at 12.07% of hours worked in a pay period.
• Provide for holiday entitlement to be calculated at the end of each pay period rather than on a monthly basis, as originally proposed in the consultation.
• Introduce a legal definition of 'irregular hours and part-year workers' in order to provide the maximum clarity for employers on the scope of the new law.
• Introduce the ability to pay rolled-up holiday pay at the statutory rate of 12.07% for irregular hours workers, part-year workers and some agency workers. This will mean that holiday pay will be able to be paid as an enhancement to a worker's rate of pay at the time they perform the work, rather than the time they take the holiday.

Comment

The draft regulations brought forward by the Government are due to come into force on 1 January 2024 and will change part-year workers' holiday entitlement for leave years beginning on or after 1 April 2024. Until then, part-year and irregular hours workers remain entitled to 5.6 weeks' unreduced statutory holiday. Employers may wish to take this opportunity to plan their next steps in respect of staff communications and any process necessary to give effect to these changes when they come into force.

For more information or advice, please contact Simon Bevan in our Employment on 0117 314 5238, or complete the form below.