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Employment Law A-Z Holiday Pay

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H is for… Holiday Pay

Notably, there have been some fundamental changes to holiday pay in 2024, the first of which were implemented after 1 January 2024. These include for example, express provisions regarding the carry-over of annual leave, a new clearer definition of a week’s pay and the repealing of carry-over rules.

Key changes have also been implemented that impact on the way that holiday pay is calculated for irregular hours and part-year workers. For leave years that begin on or after 1 April 2024, this means that holiday can be calculated in hours rather than weeks and accrues on the last day of each pay period, at a rate of 12.07% of actual hours worked. The changes also re-introduced the legal process of paying rolled-up holiday pay for these types of workers (which had previously been rule unlawful by case law). In addition an average rate of pay received over a 52-week reference period will be used to calculate the amount of holiday accrued during a period of leave such as sickness or maternity.

It is important to note that these changes will not affect all businesses at the same time, as this will be on a gradual, phased basis when new holiday years start post 1 April 2024.