The government introduced changes to the Working Time Regulations on 1st January 2024, which has resulted in important changes to holiday pay and entitlement.
Carry Over of Annual Leave
From 1 January 2024 the following principles relating to the carryover of annual leave apply.
If any employee is unable to take some or all of their statutory holiday entitlement inclusive of bank holidays (i.e. 28 days) as a result of taking a period of maternity or other family related leave, then they will be entitled to carry forward up to 28 days of their untaken leave into the following leave year.
If an employee is unable to take some or all of their statutory holiday entitlement as a result of being off sick, then the worker will be entitled to carry forward up to 20 days of their untaken leave into the following leave year, provided it is then taken by the end of the period of 18 months starting from the end of the leave year in which it was accrued. These 20 days should be paid at the ‘normal’ rate.
An employee will also be entitled to carry their annual leave entitlement forward into the next year the leave 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 encouraged them to do so; or
- the employer failed to inform the worker that untaken leave will must be used before the end of the leave year to prevent it from being lost
This is to enable employees to have the required rest periods under the EU Working Time Regulations to which the UK is still ‘signed up’.
Holiday Pay
All employees are legally entitled to 28 days of paid statutory holiday entitlement per year. 20 days of this entitlement must be paid at a worker’s ‘normal’ rate of pay (as specified by Regulation 13 of the Working Time Regulations). This includes any regular payments, such as overtime, regular bonuses and commission i.e. the weekly/monthly pay they would normally receive has they been at work.
The remaining 8 days entitlement (UK bank holidays) can be paid at ‘basic’ rate of pay i.e. their basic wage without overtime, commission, bonuses etc.
Many employers 28 days at the ‘normal’ rate of pay. If an employer wishes to pay different holiday rates for different periods of leave, then they need to ensure this is communicated to employees and detailed in the employment contract and employee handbook.
Leave affected by 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.
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.
Workers whose employment terminates on or before 31 March 2024 can claim any pay in lieu of any remaining entitlement they were unable to use due to the effects of coronavirus.
Irregular Hours Workers Holiday Pay and Accrual
Replacing the formerly complicated formula of calculating casual worker’s holiday entitlement, as from 1st April 2024, every irregular hour’s worker will accrue annual leave based on 12.07% of the hours they work each month. 12.07% is based on the statutory annual leave entitlement of 28 days.
If the casual worker does not want to take the time off as annual leave, they can be paid “rolled up” holiday pay i.e. they can receive payment of annual leave in lieu each pay period, at a rate of 12.07% of their normal pay.