How do I pay holiday pay for zero-hours staff?
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Holiday for irregular hours staff and part year staff is set to change significantly from April via changes to the Working Time Regulations 1998
Firstly, employers need to confirm that their zero hours employees fall within the definition of irregular hours or part year workers. Irregular hours are those workers whose paid hours set out in their contract vary in each pay period; a zero hours contract would meet this definition as there is no guarantee of hours to be given each week. Part-year workers are those who are contractually only required to work for part of the year and for the remainder neither work nor receive pay. For example, a term time worker who only gets paid whilst their working would meet this definition.
The next element to confirm is when their holiday year runs from and to. The changes being brought in on 1 April 2024 will apply to all holiday years starting on or after that date. So, if employers have a holiday year that runs April to March, the changes will apply immediately. If, however, they have a different holiday year, such as a calendar year (January – December), then the changes will not apply until January 2025.
Once your client has identified which workers within their organisation the changes will apply to, and when, they will need to make the following changes to their employment contracts. Note that whilst the law will have changed, consultation is still needed for contractual changes and the agreement of the affected employees sought and gained. Where they do not agree, it may be necessary to formally consult with employees.
For holiday years starting on or after 1 April 2024, part year and irregular hours workers will accrue holiday based on 12.07% of the hours worked in the pay period.
A choice of methods to pay holiday pay to irregular hours and part year workers will be available:
· Holiday pay is paid when holiday is taken; or
· Holiday pay is 'rolled' up and paid in each pay packet on top of pay for every hour worked. Employers who use this method must uplift pay by 12.07% - where the statutory minimum of 5.6 weeks of paid annual leave is given - for every hour worked in each pay period. Rolled up holiday pay must be identified separately and clearly on the payslip.
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