New holiday pay regime coming in January 2024

The government plans to implement the following changes to holiday pay to correct the somewhat baffling array of case law that has developed over the last 10-15 years.

1. Permitting rolled-up holiday pay

This is a change back to, again, accepting in certain cases rolled-up holiday pay and will apply for irregular-hours and part-year workers and will be applicable for leave years starting on or after 1 April 2024.

2. Simplification of what is deemed to be "normal remuneration".

For example, for holiday pay purposes it will include:

• Commission; and
• Regular overtime payments etc.

This, again, is to reflect the case law developments and is due to come into force on 1 January 2024.

3. A set method to apply for holiday accruals of irregular-hours and part-year workers and some agency workers too.

This will be based on the commonly accepted 12.07% of hours worked.

Workers on sick leave or other family-related leave will have accrual based on average working hours over a 52-week reference period.

These changes are applicable from 1 April 2024.

4. Clarification of when carry-over of holiday is permitted

Carryover will be specified as permitted in certain situations, including the inability to take holiday as a result of sickness and family leave.

This is due to come into force on 1 January 2024.