Dissecting Employment Legislation - Work Time Regulation Changes
The Working Time Regulations (WTR) are the backbone of employment in the UK with non-compliance carrying many risks for UK businesses. It is therefore essential to keep abreast of the changes and understand their impact on your procedures. The key changes to the WTR in 2024 are as follows:
In response to the Harpur Trust v Brazel case, the WTD has defined irregular hours and part-year workers. Alongside this, it now explains how to calculate statutory holiday entitlement for this category of workers both when at work and during periods of absence.
The introduction of rolled-up holiday pay.
The Working Time (Coronavirus) (Amendment) Regulations 2020 have been removed so leave carried forward under this regulation must be used by 31st March 2024
The requirement to keep “adequate” records of daily working time for each worker has been relaxed. Instead, employers are only required to keep records to demonstrate compliance with obligations.
Holiday Entitlement changes apply to leave years beginning on or after 1st April 2024.
In detail:
What constitutes an irregular hours worker?
This is a worker who is employed under a casual or zero-hours contract. Their paid hours in each pay period of a leave year must be completely or mostly variable. It does not apply to shift workers who have fixed hours that vary from week to week.
What constitutes a part-year worker?
This is a worker who is only contracted to work part of the leave year and has periods of at least 1 week in which they aren’t required to work and aren’t paid. This does not include salaried workers who have periods when they aren’t required to work as they continue to receive pay whilst they aren’t working.
Our holiday year runs from January to December, do we need to recalculate leave for these workers from April?
No, the change will only be applicable from the start of your leave year. In this case, from January 2025.
How is statutory holiday entitlement calculated for this category of worker?
Statutory holiday entitlement is 12.07% of actual hours worked in a pay period. This percentage represents the statutory holiday entitlement (5.6 weeks) divided by the number of working weeks in the year (46.4 weeks). Accrued holidays for this category of worker are calculated at the end of a pay period.
For Example, if a worker worked 80 hours in the pay period, their leave would be calculated as follows:
80 x (12.07/100) = 9.656 hours.
This result is rounded up or down to the nearest whole hour so in this case, the worker has accrued 10 hours leave.
Is the calculation different if our organisation offers enhanced annual leave?
Yes. If your organisation offers enhanced holiday entitlement, then the multiplier will be different. It can be calculated as follows:
Full holiday entitlement including bank holidays / 52 weeks – full holiday entitlement
Eg if you offer all employees 25 days annual leave, this equates to 6.6 weeks leave including bank holidays:
6.6 weeks / 45.4 weeks (52-6.6) = 14.54%
How is the rate of pay calculated for Irregular or part-year workers when taken?
To calculate the pay rate, a week should considered as starting on Sunday and ending on Saturday. Starting with the week ending on the Saturday prior to the leave, add up the payments for the last 52 weeks worked going back to a maximum of 104 weeks.
This total should then be divided by 52 to obtain the rate of pay for a week’s holiday.
If the employee hasn’t worked for 52 weeks in the previous 104 weeks for any reason then you should just calculate the average pay based on the number of weeks worked.
How is leave accrued for irregular or part-year workers when absent due to sickness or maternity?
The leave entitlement is calculated based on a 52-week relevant period which starts the day before the first day of absence.
Calculate the average hours worked per week as follows:
Total hours worked in period / 46.4 (possible working weeks in a year) = Average working hours per week
Now calculate the holiday accrual for each week as follows:
Average Hours per week x (12.07/100) = leave accrued per week
To calculate the total number of hours accrued
Leave accrued per week x no. of weeks absent
What if the employee was absent due to sickness or family-related leave in the 52 week relevant period?
These weeks should be discounted from the calculation and the period extended by this number of weeks.
For example, if an employee has 3 weeks of sickness absence in the 52-week relevant period, then these weeks should be discounted, and the relevant period should be extended to 55 weeks.
What if the employee has been employed for fewer than 52 weeks?
In this case, the relevant period should be reduced to cover the number of full weeks the worker has been employed.
What is rolled-up holiday pay?
Rolled-up holiday pay is added to every payment a worker receives instead of accruing holiday entitlement. It can only be used for part-year and irregular workers. It is important to ensure there is the provision in the worker's contract before applying rolled-up holiday pay.
How is rolled-up holiday pay calculated?
You can calculate rolled-up holiday pay using the following formula:
Total normal pay in the pay period x (12.07 x 100). The answer should then be rounded up or down to the nearest pence.
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