Changes to holiday accrual and pay

The UK holiday accrual system is set to change from 1st April 2024, bringing significant adjustments to how holiday entitlement and pay are calculated for workers with irregular hours and part-year workers.

The new accrual system will allow holiday to accrue at the end of each pay period at a rate of 12.07% of hours worked and rolled-up holiday will be permitted for these types of workers. Employers will need to ensure that the relevant provisions in the new regulations are applied to Great Britain (England, Wales and Scotland) only, as employment law is devolved to Northern Ireland.

The changes aim to provide clarity and coherence to the holiday pay system, but they are likely to have a more significant impact on employers with varied workforces and complex pay structures. It is important for employers to familiarise themselves with the new regulations and ensure compliance to avoid any potential legal issues.

Here is some advice for employers in light of the upcoming changes to the UK holiday pay accrual system:

• Familiarise yourself with the new regulations: Take the time to understand the new accrual system and how it will impact the calculation of holiday entitlement and pay for workers with irregular hours and part-year workers.
• Update policies and procedures: Review and update your company’s policies and procedures to ensure they align with the new regulations. This may include changes to how holiday entitlement is calculated and recorded.
• Communicate changes to employees: It is important to communicate any changes to the holiday pay accrual system to your employees. This will help to avoid any confusion or misunderstandings and ensure that everyone is aware of their entitlements.
• Seek legal advice if necessary: If you are unsure about how the changes will impact your business, it may be worth seeking legal advice to ensure that you are fully compliant with the new regulations.
• Consider the impact on payroll systems: The changes to the holiday pay accrual system may also impact your payroll systems, so it is important to consider any necessary updates or changes to ensure compliance.

By taking the time to understand the new regulations and how they will impact your business, you can ensure that you are fully compliant with the changes.

For further information on holiday accrual changes or payroll considerations, please contact us on 023 8046 1222 or email James Alesbury.