I’m personally delighted with the amendments to the arrangements for calculating and processing holidays for zero hour and casual workers.
Seeing a return in the 12.07% holiday calculation and the ability to roll-up holiday makes complete sense, for both employer and employee.
Having spent a significant amount of time in the HR arena, I remember when these exact arrangements were in place first time around, and do you know what, they worked a treat!
Previously organisations calculated the holiday entitlement of workers based on 5.6 weeks holiday (or a higher amount, where the organisation offered more than the statutory minimum holiday entitlement).
This means calculating the average hours that the worker had worked within a 52-week period. Weeks where a worker had worked fewer hours due to sickness or where the worker didn’t work at all; organisations should use an earlier week for the calculation. If necessary, organisations could use a 104-week reference period.
From the description alone, you will have no doubt guessed that this method was a complete administrative nightmare and wasn’t always workable.
Workers also had to book holidays off - seems reasonable hey? In theory yes, but in practice it didn’t make a lot of sense given the nature of the casual arrangement in place. There is no obligation for the worker to take work and no obligation for the organisation to offer work; and so, making a holiday request seemed a little disjointed right?
Fast forward to the 2024 pay and holiday entitlement reforms... the calculation method and rules for paying holiday have changed. Hallelujah!
Holiday entitlement of a worker should now be calculated by taking 12.07%* of the actual hours they have worked in a pay period.
*in the case of a worker contracted to the statutory minimum of 5.6 weeks holiday. If your workers are contracted to an enhanced holiday arrangement, see the below table detailing the % you should use for calculating their holiday.
| Holiday Entitlement | % |
|---|---|
| 5.6 weeks (equivalent to 28 days) | 12.07% |
| 5.8 weeks (29 days) | 12.5% |
| 6 weeks (30 days) | 12.93% |
| 6.2 weeks (31 days) | 13.36% |
| 6.4 weeks (32 days) | 13.79% |
| 6.6 weeks (33 days) | 14.22% |
| 6.8 weeks (34 days) | 14.65% |
In addition to this, organisations can now roll up workers holiday pay. This means that organisations can include an additional amount with every payslip to cover a worker’s holiday pay as opposed to paying for holidays when the worker request to take a holiday. And this amount is calculated by looking at the hours that a worker has worked over the pay period x by 12.07%.
An example: the worker is paid on a monthly basis and accrue holiday at a rate of 5.6 weeks, they have worked 25 hours within the month, they are therefore entitled to 3 hours of paid annual leave. (12.07/100 x 25 = 3). It really is that easy.
Anna is a HR Consultant at StaffLeave, heading up our HR Services division, and likes to contribute ways to help you get the most of your holiday management, improve well-being and work-life balance.
