The government has introduced reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations.

Definition of an irregular hour worker and a part-year worker

How a worker is classified will depend on the precise nature of their working arrangements. We would encourage employers to ensure that working patterns are clear in their workers’ contracts.

The government has defined irregular and part-year as the following:

Irregular hours workers

A worker is an irregular hours worker, in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.

Part-year workers

A worker is a part-year worker, in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid. This includes part-year workers who may have fixed hours.

Holiday entitlement for irregular hours workers and part-year workers

How statutory holiday entitlement is accrued

For workers who are not irregular hours or part-year workers, there is no change in how their statutory holiday entitlement is accrued. The method remains so that in the first year of employment, workers receive one twelfth of the statutory entitlement on the first day of each month. After the first year of employment, a worker gets holiday entitlement based upon their statutory and contractual entitlement. Their entitlement will be based upon the proportion of a week which they are contracted to work. This is known as ‘pro-rating’.

For leave years that begin before 1 April 2024, holiday entitlement will continue to be calculated in the same way for irregular hours and part-year workers. Use the holiday entitlement calculator to work out entitlement.

For leave years beginning on or after 1 April 2024, there is a new accrual method for irregular hour workers and part-year workers in the first year of employment and beyond. Holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period.

The accrual method to work out entitlement will apply to an agency worker if the agency worker’s arrangements fall within the meanings of both a ‘worker’ (as already defined) and either an ‘irregular hours worker’ or a ‘part-year worker’, as per the new definition in the Working Time Regulations.

An agency worker who is a ‘worker’ but not an ‘irregular hours worker’ or a ‘part-year worker’, will continue to accrue leave at one twelfth of their entitlement at the start of each month during their first year of employment.

Statutory paid holiday entitlement is limited to 28 days. For example, staff working 6 days a week are only entitled to 28 days’ paid holiday.

If an irregular hours/ part-year worker is paid weekly and works 4 hours a week or less, then it may be appropriate for the employer to round up to the next half hour or hour to ensure  the worker accrues holiday entitlement.

More details and helpful examples can be found here