The UK government has opened a consultation on how holiday pay is calculated for part-year and irregular-hours workers based on the annual hours they work.
This consultation has been launched after the supreme court ruling on holiday pay in Harpur Trust v Brazel.
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The judgment which happened in July 2022, ruled a part-year irregular working music teacher Ms Brazel as having her holiday pay calculated on the same basis as a full-time employee.
This was concluded after the legislation, Working Time Regulations 1998, stated that holiday entitlement for part-year workers should not be pro-rated.
This has created a lot of confusion among employers and HR about how holiday pay should be calculated.
The government have said they propose to introduce a holiday entitlement reference point.
This would ensure that part-year, zero-hours and temporary employees are entitled to holiday pay equal to the amount of time they have worked.
They also want to look into how entitlement is currently calculated for agency workers. And how the consultation proposal might be put into effect.
The consultation closes on the 9th of March 2023.
Currently, almost all workers are entitled to 5.6 weeks of holiday entitlement each year. This includes agency workers, workers with irregular hours and workers on zero-hours contracts.
This entitlement is mostly granted under the Working Time Regulations 1998 (WTR).
A 52-week holiday entitlement is currently available to irregular-hours workers, although weeks without work mean the entitlement may be less. Part-year workers on the other hand are not entitled to a 52-week holiday.
The consultation will look at putting in legislation that allows employers to pro-rate holiday entitlement for part-year and irregular workers.
The easiest way to do this would be to base the entitlement on the amount of time spent working over the previous 52-week period.
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The government thinks that legislation for part-year and irregular workers would give clarity to employees.
Clear steps and regulations would help employees feel confident that their holiday entitlement would be calculated correctly.
It would also offer employers a straightforward method to use, rather than you having to understand complex case law.
Overall, the government wants to propose that the length of the holiday entitlement reference period should mirror the length of the current holiday pay reference period for consistency.
Holiday pay and entitlement for part-year and irregular staff can be difficult to calculate, and just like the Harpur Trust v Brazel case, it can be damaging and risky for a business if you get it wrong.
If you would like advice on holiday pay and entitlement for your employees – speak to one of our HR and Employment Law advisors free today at 0800 152 2287.
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