Changes in holiday pay for part-year and irregular hours workers

In response to two recent consultations on holiday pay, the Department for Business and Trade (DBT) is introducing new rules that will affect those employees who work irregular hours.

The proposed changes are set to take effect for leave years starting on or after 1 April 2024. The focus is on workers with irregular hours or those who work only part of the year:

1. Irregular hours worker: If someone’s paid hours vary significantly for each pay period during their contract term for a particular leave year, they are considered an irregular hours worker.

2. Part-year worker: A part-year worker is someone who, as per their contract, is required to work only part of the year. Additionally, there are periods within that year (specified in the contract) where they are not required to work, and they won’t receive payment for those times.

Key changes include:

• Holidays for irregular hours workers and part-year workers to be calculated based on 12.07% of hours worked.

• Rolled up holiday pay for irregular hours workers and part-year workers is legal.

• Changes to the carrying over of annual leave.