From 1st January 2024 changes to the ‘Working Time Regulations’ came into effect which detail some significant changes that have the potential to catch employers out –one important change to note is that employees can now carry forward their statutory holiday entitlement if their employer has not ‘encouraged’ them to take it. The changes have also provided more clarity regarding calculating holiday pay for irregular hours workers and part-year workers. As well as introducing rolled up holiday pay for some workers.
So, what do you need to know? Here’s a top-level overview of some of the key changes:
Holiday carry over:
Employees can now carry leave forward that they should have been entitled to take if:
- The employer has refused to pay a worker their paid leave entitlement
- The employer has not given the worker a reasonable opportunity to take their leave and not encouraged them to do so; or
- The employer failed to inform the worker that untaken leave must be used before the end of the leave year to prevent it from being lost
Employees can still carry over leave if they have been unable to take it as a result of maternity or other family related leave or as a result of being off sick.
COVID-19: Previously, workers could carry over untaken leave into the next 2 years if they could not take it because their work was affected by coronavirus. However, the following changes have been introduced ;
- From 1 January 2024, workers can no longer accrue COVID carryover leave. Workers will still be able to use the leave they accrued prior to 1 January 2024 before or on 31 March 2024.
- The changes also now confirm that workers whose employment terminates on or before 31 March 2024 are able to claim any pay in lieu of any remaining entitlement they were unable to use due to the effects of coronavirus.
Holiday pay calculations:
All full-year workers, except those who are genuinely self-employed, are legally entitled to 5.6 weeks of paid statutory holiday entitlement per year. Four weeks of this entitlement must be paid at a worker’s ‘normal’ rate of pay (as specified by Regulation 13 of the Working Time Regulations). Normal rate of pay can include overtime and commission.
From 1st January 2024, the components which must be included when calculating ‘normal’ rate of pay are defined in the Regulations, therefore, the following must be included in the 4 weeks normal holiday pay:
- Payments, including commission, intrinsically linked to the performance of tasks which a worker is contractually obliged to carry out.
- Payments for professional or personal status relating to length of service, seniority or professional qualifications.
- Payments such as overtime payments, which have been regularly paid to a worker in the previous 52 weeks.
Holiday accrual:
For leave years starting on or after 1st April 2024, the Regulations state the accrual method of 12.07% of the hours worked in a pay period is to be used when calculating holiday pay for irregular-hours workers and part-year workers. Employers can also use the rolled-up holiday pay method as an additional method for calculating holidays for irregular hours and part-year workers for leave beginning on or after 1st April 2024. This essentially means that holiday is paid at the time the work is done rather than when the worker is on holiday.
Record-keeping requirements:
These changes clarify that employers do not need to keep an adequate record of each worker’s daily working hours as long as they can demonstrate compliance with weekly working limits. We recommend that employers should still keep records in regard to working patterns.
Commenting on the updated regulations, Sarah Calderwood, Partner in our employment team said:
“It is important for employers to be aware of such changes and implement changes to employment contracts/handbooks, especially regarding changes to holiday pay and accrual.
We would urge all employers to spend time reading though the new Regulations in detail and consulting with their solicitors should they have any questions at all.”
The new Working Time Regulations came into effect from the 1st January 2024 and full details can be found here.
If you’d like to speak to our employment team and how they can support you with these changes, you can contact us by calling 0330 111 3131 or by filling in our contact form here.