The government has released its responses to consultations on reforms to retained EU laws and the calculation of annual leave entitlement for part year and irregular hours workers.

The recent government release regarding changes to holiday entitlement calculations marks a significant development in the realm of employment laws. This update is a response to consultations on the reform of retained EU laws, focusing particularly on how annual leave entitlement is calculated for part-year and irregular hours workers. The intention behind these changes is to ensure fair and equitable treatment for individuals whose work patterns may not conform to traditional full-time employment standards.

In addressing the concerns raised during the consultations, the government aims to establish a more inclusive framework that accommodates the diverse nature of modern work arrangements. By revisiting and potentially amending the existing regulations related to holiday entitlement, the authorities strive to strike a balance between the rights of employees and the practicalities faced by employers managing staff with varying work schedules. This move reflects an ongoing commitment to adapt labour laws to the evolving landscape of employment, acknowledging the growing prevalence of non-traditional work structures and the need for corresponding adjustments in entitlement calculations.

• Annual leave entitlement for irregular hours workers and part year workers will be calculated with an accrual method, to ensure leave is based on hours actually worked in the year.
• Leave will be accrued based on 12.07% of hours worked in the pay period whatever that pay period may be i.e., monthly, weekly, daily. This will overturn the effect of the Harpur Trust v Brazel decision.
• Rolled up holiday pay will become lawful again but only for irregular hours workers (for example zero hours workers) and part year workers. It must be calculated based on total earnings in the pay period.
• ‘Irregular hours worker’ and ‘part year worker’ will be defined in law. Should an agency worker’s hours meet this definition, the rules on calculating annual leave entitlement will be applied to them also.
• The emergency rules on annual leave implemented in 2020, meaning that workers could carry over four weeks of leave into the next two leave years where it was not reasonably practicable for them to take it due to the effects of Covid, will be removed.
• From 1 January 2024, the normal rules will apply meaning 1.6 weeks can be carried over to the next leave year where there is written agreement between employer/employee. Any ‘Covid carry over leave’ accrued by that date but not taken must be taken by 31 March 2024.