We previously shared an update regarding changes to the calculation of annual leave entitlements for workers on irregular hours contracts. This serves as a reminder of these important changes and outlines the actions required to ensure compliance.
The changes affect how annual leave is calculated for individuals working irregular hours, including those on zero-hours and casual contracts. Virtually all such contracts fall within the scope of this amendment. An irregular hours worker is defined as someone whose working hours in each pay period are predominantly or entirely variable under the terms of their contract.
Under the new rules, irregular hours and part-year workers accrue annual leave as follows:
- Holiday entitlement accrues at 12.07% of the hours worked in a pay period.
- Accrued holiday is calculated on the last day of the pay period (e.g., weekly or monthly, depending on the pay schedule).
For workers receiving the statutory minimum holiday entitlement of 5.6 weeks, this equates to a maximum of 28 days of annual leave per year. If a contract provides for more than the statutory minimum, the percentage must be adjusted accordingly.
These changes apply to leave accrued in the holiday year starting on or after 1 April 2024. For example:
- If your holiday year begins on 1 January, the changes will take effect from 1 January 2025.
- If your holiday year begins on 1 April, they will apply to the holiday year starting 1 April 2024.
To reflect these changes, the template contracts on HRManager have been updated. Please ensure that any new contracts issued align with the revised template. Additionally, all existing workers on zero-hours and casual contracts must be issued updated contracts to comply with the new legal requirements. It is also important to clearly communicate these changes to affected workers, explaining how their holiday entitlement will now be calculated.
If you require assistance with issuing updated contracts or have questions about these changes, please get in touch.
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