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Quick guide to the developments in workers’ annual leave and pay

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What was the law previously?What is it now?
In Harpur Trust v Brezel the Government ruled that the 12.07% approach when calculating annual leave and holiday pay entitlements for workers who work varying hours was unlawful.For irregular hour workers and part year workers there will be a holiday accrual based on 12.07% of the hours worked in the previous pay period. There will be a right for employers to implement “rolled-up” holiday pay. If employers choose to implement this, workers would receive an uplift to their normal pay of 12.07% instead of being paid when holiday is taken.
A worker should receive holiday pay based on a week’s ‘normal remuneration’. For workers with fixed working hours and fixed pay, this will be easy to calculate. For workers with varying hours and pay (i.e. those receiving commission or overtime as above) holiday pay will need to be calculated using the worker’s average pay over a set reference period. This law still applies, but with the addition of those to the right.“normal remuneration” will be defined as specifically including the following:

  1. Payments, including commission payments, intrinsically linked to the performance of tasks which a worker is contractually obliged to carry out
  2. Payments for professional or personal status relating to length of service, seniority or professional qualifications

Payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation

Previously there was no clear cut definition of irregular hours and part-year workers.A definition for irregular hours workers and part-year workers has been set out in regulations.
The Working Time Regulations 1998 was amended in 2020 to allow for the carry-over of annual leave where it was not reasonably practicable to take it because of the impact of coronavirus (either on the worker, the employer, the wider economy or society)This has now been removed and any outstanding leave under this must be taken before 31 March 2024.
Unused annual leave due to long term sickness could only be carried over for a year.This has now been extended for up to 4 weeks, but the carried over leave must be used within 18 months of the end of the holiday period it accrued.
Tom Charteress

Posted:

Tom Charteress

Trainee Solicitor

Tom is a Trainee Solicitor in the Employment team based in the Northampton office and deals with employment issues in a pragmatic and logical approach.