Rules around holiday pay for irregular hours and part-year workers has been a confusing topic of conversation for some time in the payroll world.
From 1st April 2024, employers are allowed to pay rolled up holiday pay. This means that they can spread an employee’s annual holiday pay over the year and add it to their payslip each pay period, rather than paying it as and when an employee takes holiday. Please note this isn’t an obligation but just an option for employers and employees to discuss.
Rolled up holiday pay is particularly useful for irregular and part-year workers, where sometimes shifts are not accepted when holidays are taken resulting in unpaid leave, rather than paid holiday leave.
HOW IT WORKS
Employers who are using rolled up holiday pay will need to do the following: –
1) Calculate the holiday pay at 12.07% of total gross earnings for any given period
2) Add this to the payslip each period that the employee has worked
3) Show this as a separate line item to any earnings on the employee’s payslip
THINGS TO CONSIDER
1) You must still make sure that employees take the holidays they are entitled to
2) Encourage the workers to do so
3) Tell workers if you intend to use rolled up holiday pay and change contracts if required
4) Please discuss this with an HR advisor to understand your full legal responsibilities
