How to Calculate Holiday Entitlement and Pay | urgent update for employers

The Supreme Court has now confirmed that all part-year permanent workers – namely those who are employed throughout the year but don’t work every week such as those on zero hours, ad-hoc or term-time contracts – are entitled to 5.6 weeks’ paid annual leave in each leave year, and this leave cannot be pro-rated according to the number of hours worked. 

As a result, many employers will need to rethink how they calculate holiday entitlement and pay going forward and decide how to deal with any past underpayments as a matter of urgency to avoid the risk of holiday pay claims.

So what categories of workers are impacted? What method should you use to calculate holiday entitlement and pay moving forward? What are the potential legal risks of not updating your practices? And what should you do about previous underpayments of holiday pay? 

8 September at 11.00 am

The past few years have seen a steady flow of cases concerning holiday pay. Amongst them, Harpur Trust v Brazel has been one to watch, and the highly anticipated judgment delivered in July has sparked much conversation – and confusion – amongst employers.

While the judgment provided some clarification around the holiday entitlement for part-year workers and the method employers shouldn’t use to calculate their holiday entitlement and pay, certain key questions remain unanswered.

What’s new?

In essence, the Supreme Court’s decision confirms that, for permanent workers who only work part of the year, it is unlawful to pro-rate the 5.6 weeks’ paid leave granted to workers under the Working Time Regulations (WTR). This means that the widely used 12.07% accrual method which links holiday entitlement to the number of hours worked is now off the table for these workers and those who continue to use this method, or who have done historically, could face costly holiday pay claims.

If, like many employers, you’re confused about what this means for your business and want to make sure you’re staying on the right side of the law, join WorkNest’s Principal Employment Law Solicitor, Lesley Rennie, as she unpicks the Supreme Court’s decision and answers the top five questions puzzling employers right now.

In this free one-hour webinar, we’ll explain:

  • The background to the case and a breakdown of the Supreme Court’s decision
  • The types of workers impacted by the decision
  • Our recommended approach for calculating holiday entitlement and pay for variable hour workers going forward

Plus, we’ll be answering five key questions you may have now:

  • Can businesses still pro-rate annual leave entitlement for those not working full weeks?
  • Is there still a place for the 12.07% accrual method at all?
  • Can businesses pro-rate additional, contractual leave according to hours/weeks worked?
  • What impact does the decision have on the practice of ‘rolled-up’ holiday pay?
  • How should businesses assess their potential liability and deal with any underpayments of holiday pay?

Everyone who attends this session will receive a copy of our Holiday Pay 101 guide, produced by our Employment Law experts.

Register below

Support calculating holiday entitlement and pay

Due to the complex and evolving nature of this area of employment law, we strongly recommend that you seek professional support to ensure you’re implementing the decision correctly and compliantly.

WorkNest’s Employment Law and HR specialists can:

• Provide pragmatic advice on how to ensure that all categories of workers are receiving their correct holiday entitlement and pay to reduce your risk of claims
• Advise on how to deal with underpayments, including drafting all employee correspondence on your behalf so you can be sure it’s watertight

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