More than two-thirds of employers have yet to adjust their holiday pay processes, despite new regulations.
- A recent WorkNest poll reveals widespread confusion among employers over new holiday pay rules.
- Changes to the Working Time Regulations mainly affect ‘irregular hours’ and ‘part-year’ workers.
- Four in ten employers are uncertain about the reforms’ impact on their workforce.
- Many employers seek further clarification on the newly defined worker categories.
In a significant development for employment law, more than two-thirds of employers, according to a WorkNest poll, have not acted on new rules for calculating holiday entitlement and pay, even a month after these regulations took effect. This hesitance largely stems from the adjustments to the Working Time Regulations, which particularly impact ‘irregular hours’ and ‘part-year’ workers – categories that comprise a substantial segment of the UK workforce. These changes apply to annual leave years commencing on or after April 1, 2024.
The year 2024 has seen a surge in employment law reforms, with the most impactful being the alterations to holiday pay and entitlement. These revisions, alongside changes in the right to request flexible working, are posing significant challenges for employers. During a recent WorkNest webinar, the majority of queries focused on the new holiday pay calculations, highlighting the need for further understanding and adaptation among employers.
A primary hurdle for employers is the ambiguous definition of ‘irregular hours’ and ‘part-year’ workers. The legislative amendments provide explicit definitions, and the Government has issued guidance, but these efforts fall short of offering complete clarity. Employment law specialists at WorkNest note this lack of clarity is a source of confusion, as the scope of these terms remains vague, leading to more inquiries rather than solutions.
Polling data from WorkNest show that nearly 60% of employers feel the need for more comprehensive guidance to effectively navigate these changes. Lesley Rennie, a Principal Employment Law Solicitor at WorkNest, cautions that the ongoing uncertainty could lead to employers misclassifying workers and, consequently, miscalculating holiday pay, potentially resulting in legal complications, such as breach of contract or wrongful wage deductions.
Rennie advises employers to conduct thorough audits of their workforce to identify which employees might be classified as ‘irregular hours’ or ‘part-year’ workers. She recommends seeking expert advice for ambiguous cases and revisiting contracts to ensure compliance with the new laws. Employers are also encouraged to update their systems for tracking leave and ensure policies are clear in setting out how leave is taken and compensated.
Employers must take proactive steps to comply with the new holiday pay rules to avoid potential legal issues.
