Changes to holiday entitlement and pay – what you need to know

12 March 2024

A calendar marked with annual leave on date 25

Photograph: syahrir maulana / Alamy

This year will see the introduction of changes to the way annual leave entitlement is calculated for some workers. Employment Service Manager Sanjay Sinhal answers your top 6 questions.

1. Who do these changes apply to?

The changes apply to irregular hours and part-year workers (referred to as ‘these workers’).

An irregular hours worker is where the number of paid hours they work in each pay period during a particular year wholly, or mostly, varies – for example, a zero hours worker.

A part-year worker is where they are employed year round but are contractually required to work only part of a particular year, and there are periods within the year of at least a week in which they are not required to work and for which they are not paid – for example, employed year-round but work term time only.

2. When do these changes come into effect?

The new rules apply to holiday years starting on or after 1 April 2024. So, if your leave year, as is often the case, coincides with the calendar year, the new rules will apply to you from 1 January 2025.

3. How do I calculate annual leave entitlement for these workers? 

Using an accrual method throughout the holiday year.

Employers can calculate the annual leave entitlement as 12.07% of hours worked in each pay period (rounded to the nearest hour), to a maximum of 28 days statutory leave. The rules for regular hours workers have not changed.

4. How does this differ from the previous position?

Previously these workers would receive 5.6 weeks of annual leave and this was not pro-rated to hours worked.

In the first year of employment the 5.6 weeks accrued at a rate of 1/12th on the first day of each month and in the second year of employment the full entitlement would be accrued at the start of each leave year.

The 12.07% accrual system will now apply in the first year and beyond.

5. How is holiday pay calculated for these workers?

Employers can either pay holiday when it is taken or pay RHP (rolled up holiday pay). Workers are entitled to 5.6 weeks of annual leave – this is made up of four weeks of EU-derived leave and 1.6 weeks of domestic leave.

Workers generally must receive four weeks of leave at their normal rate of pay (based on the average weekly pay over the previous 52 weeks) and 1.6 weeks at their basic rate of pay.

However, for irregular hours and part-year workers there is now no distinction between the two entitlements and all leave must be paid at the worker’s normal rate of pay.

6. What is rolled up holiday pay and how is this calculated for these workers?

RHP is paid in addition to basic pay each pay period, rather than making a payment at the time holiday is taken.

Employers can now choose to pay RHP to these workers, calculated as a 12.07% uplift of the worker’s total earnings within each pay period, paid with each payslip and clearly marked as a separate item for RHP payment on each payslip.

Additional employment law support

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