What do the new rules on part-time holidays mean?

Workingmums.co.uk outlines what your rights are on annual leave if you work term-time only or irregular hours after a series of rulings.

Annual Leave


The law on holidays for irregular, zero hours and term-time workers is changing…again.

The Supreme Court ruled last year that employees who only work for part of the year, but permanently, are entitled to the same holiday allowance as those who work throughout the year and should not have their holidays pro-rata’d. Under the Working Time Regulations, employees are entitled to 5.6 weeks’ paid annual leave and, according to the ruling, this should apply regardless of how many weeks a year  a person works.

In November, the Government tabled new laws which, it said, aim to simplify the issues around holiday pay calculation for people who work irregular hours or part of the year who are on permanent contracts. The rules cover rolled up holiday pay, Covid-related rules on carrying over leave and leave entitlement for irregular hours workers and part-year workers.

For the latter it means that their leave will be accrued based on 12.07% of hours worked in the pay period, regardless of whether that pay period is monthly, weekly or daily, meaning they will have to earn their holiday as they work. An annual leave accrual method will be introduced for when irregular hours workers and part-year workers take sick leave or maternity/family related leave.

The Government reckons the change could save employers between £50m and £248m every year. Experts have called it one of the most significant erosions of employment rights since Brexit.

Kate Palmer, HR Advice and Consultancy Director at Peninsula Ireland which works with employers, said: “We’re dealing with a unique situation here. Some time ago the Supreme Court decided that the long-standing practice of calculating annual leave for permanently employed part-year workers, including the term-time-only worker who brought the claim in the first place, was not in line with the written law.

“The result was quite disproportionate because it meant that some workers who didn’t work all year round were legally entitled to the same length of paid annual leave as other workers who did.

“The Government quite quickly acknowledged that this was an unintended consequence of the law, and their latest plans will now apply logic to the calculation for the affected workers.”

Nevertheless, in the gap between the Supreme Court ruling and the Government announcement, these workers received what Palmer calls “an unexpected boost in their paid annual leave entitlement”.

Moreover, there could be a rough road ahead for employers who don’t manage the transition to the new rules carefully, she warns.

“Employers who increased paid time off for these workers will welcome the news that they will be able to lawfully drop entitlement again, but must understand that may not be as simple in practice as it sounds,” she says.

“A change to the law does not mean an immediate corresponding change to existing contracts and employers can risk disgruntlement and legal claims from workers if the process is not handled correctly.”

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