Holiday Pay and National Living Wage Update – 2024
April 1st saw holiday pay and entitlement reforms as well as the National Living Wage increase take effect.
Holiday Pay and Entitlement Reforms
The government introduced changes to the Working Time Regulations at the start of this year which simplified the way that holiday pay is calculated for “irregular hours” and “part-year” workers.
“Irregular Hours Worker” – means a worker whose paid hours of work in relation to a leave year in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable as defined under Regulation 15F (1)a WTR 1998
“Part Year Worker” – means a worker who in relation to a leave year, under the terms of their contract, is required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid as defined under Regulation 15 (1)b WTR 1998
The changes which take effect on or after the 1st April are as below:
- Introducing a method to calculate statutory holiday entitlement for irregular hours and part-year workers
- For leave years beginning on or after 1 April 2024, there is a new accrual method for irregular hour workers and part-year workers in the first year of employment and beyond. Holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period.
- Introducing a method to work out how much leave an irregular hour or part-year worker has accrued when they take maternity or family related leave or are off sick
- Some irregular hours and part-year workers may take maternity or family related leave or be off sick within an annual leave year. Whether a worker can take maternity or family related leave depends on their employment status. Visit employment status for further information.
- A calculation method has been introduced for leave years beginning on or after 1 April 2024 to help employers find out how much leave is accrued by an irregular hours or part-year worker in such circumstances.
- Introducing a rolled-up holiday pay as an alternative method to calculate holiday pay for irregular hours workers and part-year workers.
- Rolled-up holiday pay allows employers to include an additional amount with every payslip to cover a worker’s holiday pay, as opposed to paying holiday pay when a worker takes annual leave.
To read more about the changes: https://www.gov.uk/government/publications/simplifying-holiday-entitlement-and-holiday-pay-calculations/holiday-pay-and-entitlement-reforms-from-1-january-2024#:~:text=For%20leave%20years%20beginning%20on,worked%20in%20a%20pay%20period.
National Living Wage
The National Living Wage increased on the 1st April from £10.42 to £11.44 marking the first time since inception that the rate has increased by over £1.00.
This year also sees the rate extended to include all workers 21 and over – whereas previously this was 23 and over.
To read more: https://www.gov.uk/national-minimum-wage-rates
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