Updated Guidance on Holiday Pay

Holiday pay 

What do we already know?

We updated you in our Newsletter 2023 no.4 on the changes to holiday pay which were introduced on 1 January 2024 by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023.

We also updated you in our Newsletter 2024 no.1 the Government’s guidance on these changes.

What’s new?

The Government has updated its guidance on the holiday pay changes (following feedback) in respect of part-year and irregular hours workers.

The original guidance suggested that staff whose pay was annualised (i.e. paid in 12 equal monthly installments) would not satisfy the new definition of ‘part-year’ worker in the legislation because there were no weeks for which they did not receive pay. This would have meant that these staff (such as teachers) would accrue and be entitled to the same (and un-reduced) amount of holiday pay as full-time employees.

The updated guidance has now clarified that it is possible for staff with annualised pay to qualify as a part-year worker, provided there are periods within that year (of at least a week) during which they are not required to work and are not paid in respect of that period.

This means that staff (such as teachers) can be part year workers despite being paid in equal installments over the year. This is because there are still periods in the year when they are not required to work and do not receive pay for. Their statutory holiday entitlement will accrue at the rate of 12.07% of worked hours, in line with other part-year and irregular hours workers.

The new rules take effect for leave years starting on or after 1 April 2024.