Colleagues,
The government has this week published the outcome to the consultation it undertook earlier this year into calculating holiday entitlement for part-year and irregular hours workers. The government considered that the Supreme Court’s decision in the Harpur Trust v Brazel case resulted in part-year workers being entitled to a greater annual leave entitlement than part-time workers who work the same number of hours across the year. The consultation sought views on whether introducing a 52-week reference period for calculating holiday entitlement was the best way to respond to the effects of this judgment.
We consider that the government intends to take the following steps:
Introduce an accrual method for calculating holiday
The introduction of an accrual method will be for calculating holiday entitlement for irregular hours workers and part-year workers, and will be the method of calculation in their first year of employment and beyond. Entitlement will be calculated as 12.07% of hours worked in a pay period. Other workers will continue to accrue leave at 1/12th of their entitlement on the first day of each month during their first year of employment.
Sanction rolled-up holiday pay (RHP)
The government will introduce and legislate to allow RHP for irregular hours workers and part-year workers only.
Introduce a definition of irregular hour workers & part-year workers
The Government will define in legislation what is meant by irregular hours workers and part-year workers. Stakeholders requested that the Government is clearer on who this captures in relation to the effect of the Harpur v Brazel judgment.
Our Advice
The next step in relation to this will be for the government to formally propose the changes to the legislation and introduce new legislation as appropriate. Whether this is achievable before the next general election will be confirmed in the coming months.
We suggest this update is noted in the meantime, shared with your payroll provider if you do not already work with the neo:pm team, and that you await our further guidance and support to implement the legislative changes once they are passed.
The consultation document can be viewed by following this link.
If you would like further clarifications please contact your HR partner or payroll team as appropriate.