The UK government has published its response to two consultations on holiday entitlement and pay:
Holiday Pay and Entitlement Reform
Proposal 1: The government proposed to create a single annual leave entitlement of 5.6 weeks replacing regulation 13 and 13A. The government confirmed they will not go ahead with this proposal and we will continue to have the two types of leave:
"EU Leave" Regulation 13 - 4 weeks at normal rate of pay
"UK Leave" Regulation 13A - 1.6 weeks at basic rate of pay
Proposal 2: To introduce "rolled-up" holiday pay for all workers. The government confirmed they will introduce rolled-up holiday pay but only for irregular hours and part-year workers
Calculating Holiday Entitlement for Part Year and Irregular Hour Workers
Proposal 1: The government proposed to introduce a 52-week holiday entitlement reference period for irregular hours and part-year workers. The government confirmed they will not go ahead with this proposal.
READ: Government response
What will the new regulations be?
Draft regulations have now been published. The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 will come into force on 1 January 2024 and apply to England, Wales and Scotland.
The below measures detailed related to workers under regulation 15B and will apply to any leave years beginning on or after 1 April 2024.
12.07% Calculation Method
Employers will be able to calculate annual leave entitlement as 12.07% of hours worked in a pay period for irregular hours and part-year workers.
Calculation of annual leave accrued whilst on sick or statutory leave
The regulations will introduce a reference period for calculating annual leave accrued during sick or statutory leave.
Calculate the average number of hours per week that the worker worked during the reference period
52 week reference period - the period of 52 weeks ending with the day before the day on which the worker started the sick leave or statutory leave
exclude weeks that include sick leave or statutory leave
include all other weeks including those in which the worker did not work any hours
look back up to a maximum of 104 weeks
Calculate 12.07% of the number of hours from step 1 to get the number of hours accrued during each week of sick leave or statutory leave
Multiply the number of hours by the number of weeks in a pay period for which the worker is taking sick leave or statutory leave to give you the number of hours annual leave that has been accrued.
Rolled-up holiday pay for irregular hours workers and part-year workers
The regulations will introduce the ability to pay holiday pay to a worker via a 12.07% uplift to their pay for work done. This uplift must be paid at the same time as the worker is paid for the work.
Holiday entitlement accrued during periods of sick leave and statutory leave should be calculated in the same way as detailed above, but should be paid to the worker during those periods of sick leave and statutory leave.