Rolled-up holiday pay allowed for irregular hours workers and part-year workers
Implementation date: For holiday years starting on or after 1 April 2024
Rolled-up holiday pay will be an option for employers calculating and paying holiday pay for irregular hours workers and part-year workers.
Rolling-up holiday pay involves paying an additional amount representing holiday pay for each pay period throughout the year, instead of paying holiday pay at the time annual leave is taken. The practice was found to be unlawful by the European Court of Justice in 2006 due to the risk that it may disincentivise workers from taking annual leave.
The proposal was contained in the Government's Smarter regulation to grow the economy policy paper, published on 10 May 2023.
On 8 November 2023, the Government published its response to its consultation on the proposal, confirming that it intends to go ahead in relation to irregular hours workers and part-year workers only. It also published the draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, which will bring the measure into force.
The draft Regulations have been laid before Parliament and are due to come into force on 1 January 2024. The change will apply to holiday years beginning on or after 1 April 2024.
The consultation had also included a proposal to create a single annual leave entitlement of 5.6 weeks (combining the EU-derived entitlement of four weeks with the additional 1.6 weeks under the Working Time Regulations 1998 (SI 1998/1833)). The Government has confirmed that this proposal will not go ahead.