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Is your business compliant with significant new changes to holiday pay and more?

WorkSmarter sets out the latest reforms so you can avoid potential pitfalls.

Kathryn Webb
Kathryn Webb Worksmarter Team
2024 is only just underway and yet several key amendments to UK employment law are already in force, affecting both employers and employees.
It’s crucial that business owners and HR personnel are aware of what has changed, so policies and procedures can be reviewed accordingly to ensure compliance and avoid any potential pitfalls. 
The Employment Rights (Amendments, Revocation and Transitional Provision) Regulations came into force on January 1st.

The aim of this legislation is to simplify rules around holiday entitlement and holiday calculations in the Working Time Regulations. 
The new regulations amend the previous laws on annual leave for workers who have “irregular hours” and those who only work for part of the year. The changes have a significant impact on the way in which employers calculate and allocate annual leave to their employees. There are several aspects to this.

Holiday Pay and Annual leave
The new legislation sets out the correct calculation of annual leave accrual for workers who have irregular hours or only work for part of the year. 
The correct calculation for annual leave accrual is now set in law as being 12.07% of the hours worked in a pay period. This makes it easier for businesses who will no longer have to calculate an average over a 52-week period in which working patterns may be extremely variable. 
The regulations confirm that employers can now use rolled up holiday pay for part-year workers and those with irregular hours, for leave years beginning on or after 1 April 2024.
Rolled-up holiday pay is paid in addition to the normal salary and allows employers to include an additional amount with every payslip to cover a worker’s holiday pay, instead of paying holiday pay when a worker takes annual leave.
If an employer chooses to use rolled-up holiday pay, this will also be calculated at 12.07% of the worker’s total earnings within a pay period.

Working Time and Record Keeping
Changes to the rules around record keeping are aimed at reducing ‘time consuming’ reporting requirements. Employers are no longer required to keep records of the daily working hours of their workers, provided they can demonstrate in other ways their compliance with the rules relating to the maximum weekly working time and the length of night work.

Carrying Over Leave
If a worker is unable to take some or all their statutory holiday entitlement in some circumstances, for example due to sickness or maternity leave, they are now entitled to carry forward a number of days of their untaken leave into the following leave year. Certain provisions will apply.

Holiday Pay Rates
Full-year workers 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 and the remaining 1.6 weeks’ entitlement can be paid at ‘basic’ rate of pay, in other words the worker’s basic remuneration. However, many employers choose to pay the entire 5.6 weeks at the ‘normal’ rate of pay. 
Pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working.
The new legislation ensures that certain defined components, such as regular overtime payments and commission payments, must be included when calculating a worker’s ‘normal’ rate of pay if an employer wishes to distinguish between the two pots of leave.

The Easiest way to Plan Staff Leave
Organising annual leave across your teams shouldn’t be a hassle. However, SMEs say it can be confusing and complicated when employment law changes. 
Holiday tracking and management is effortless with WorkSmarter’s advanced platform, helping UK business comply with complex, ever-changing legislation. Our innovative People Management software provides all the right tools for the job, including the essential Staff Holiday Planner, making it easy to organise everything around your own business and the different ways you operate holiday and staff leave policies.

Free Regular Updates
As a WorkSmarter customer already making the most of easy-to-use HR software, your business is protected with free employment law alerts - explained clearly by our experts.

Our team of HR professionals constantly monitor legislation to keep you up to date whenever anything changes. Employment law alerts are sent direct to your inbox and won’t cost WorkSmarter users a penny.  

See for yourself how WorkSmarter’s affordable and intuitive platform helps SMEs manage teams more effectively.

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