Employer Checklist: New Holiday Rules 2024

The government has created new categories of workers for holiday purposes:

• irregular hours workers
• part-year workers.

It is essential that you identify whether any of your workers fall into these categories.

If you do have workers in these categories, do the new rules place them in a more favourable position than other workers as regards holiday entitlement and pay? How will you manage this? Will you 'level up' entitlements and pay for other workers?

Irregular hours and part-year workers: change holiday entitlement and pay calculations and choose holiday pay method

For holiday years starting on or after 1 April 2024, you must calculate holiday entitlement and holiday pay for irregular hours and part-year workers in line with new rules. You can also choose to either:

• use rolled-up holiday pay; or
• pay for holidays when they are taken.

Holiday pay: check calculations for all workers

Statutory rules took effect on 1 January 2024 which aimed to restate the rules on calculating holiday pay based on earlier case law.

The rules cover whether payments such as overtime, commission, allowances and bonuses should be included in holiday pay calculations. You'll need to:

• include all elements prescribed by the legislation (although many employers will already do so); and 
• ensure your calculations align with the 52-week average method for calculating the amount of such payments to include in holiday pay.

Check whether your practice aligns with these rules as regards family and sick leave.

Statutory rules took effect on 1 January 2024 which provide for holiday carry-over in the event of certain 'employer failures'. The rules aimed to restate the position based on earlier case law but may go further than some employers would expect. For example, holidays could carry over if you:

• misclassify 'workers' as 'self-employed'
• pay the incorrect amount of holiday pay
• don't encourage or give workers a reasonable opportunity to take holidays
• don't inform workers that untaken holiday will be lost at the end of the holiday year (if it can't be carried over).

Practical steps include:

• check if 'self-employed' staff are actually 'workers'
• check holiday pay calculations
• revisit your holiday policy and train line managers as regards encouraging workers, and giving them a reasonable opportunity, to take holidays
• remind workers in writing each year that untaken holidays will be lost at the end of the holiday year (if they can't be carried over).

For holiday years starting on or after 1 April 2024, your contracts can provide for 'part' of irregular hours or part-year workers' statutory holiday to be carried over to the next holiday year. Consider how much carry-over you will allow.

Making changes? Plan your approach

If you are making changes to holiday entitlement or pay calculations, consider, for example:

• How you will approach changes to individual contracts?
• If you've been underpaying holiday pay, is there a risk of claims, and how will you manage this?