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A. Yes, employers are once again permitted to pro-rata holiday entitlement. This method can be used for part-year and irregular hour workers, depending on the leave year your client uses. Technically employers were permitted to use this method since April 2024.
If your client’s leave year starts in January, then the new calculation can be adopted for their January 2025 payroll.
Part-year and irregular hours workers build up (‘accrue’) leave, depending on the hours they’ve already worked in that pay period, rather than getting a fixed number of days or hours holiday.
To differentiate between the two worker types mentioned above, a part-year worker only works for part of the year and is not paid for the remainder of the year. For example, a farm hand who works and gets paid during the spring and summer months, would qualify as a part-year worker.
An irregular hour worker is titled as such because they have a completely irregular and non-repeating working pattern. For example, a hospitality worker on a zero hour contract, who’s hours have never settled into a patten.
Both worker types can now accrue holiday at a rate of 12.07% of hours worked in that pay period. This can either be paid at the time leave is taken or can be ‘rolled-up’ and paid at the same time as they receive their wages.
Your client does not have to use the same method for all workers. They may use different methods for different groups of workers but be careful not to discriminate when choosing which method will apply to who.
The first method your client could use is to pay holiday pay when the worker takes their holiday (this is the default method), If they choose this method, they will pay workers their holiday pay when they take the holiday that they have accrued.
Alternatively, your client can choose to pay “rolled-up holiday pay” (RUHP). This is when a worker is paid holiday pay at the same time as they receive their wages, so the payments are “rolled” together.
Paying RUHP means adding on an extra 12.07% of total pay for work done in the pay period and paying it in each pay packet.
The worker is then not paid when they actually take the holiday they have accrued. A worker’s pay slip must clearly set out the element of pay attributed to RUHP. Workers who receive RUHP must still be permitted to take unpaid holiday.
Its important that the correct calculation method is used, because holiday entitlement is a statutory right, and underpayments could leave an employer at a significant risk of tribunal action.