8.4 C
Manchester
Wednesday, March 4, 2026
BusinessRolled-up holiday pay: What it means for employers

Rolled-up holiday pay: What it means for employers

New regulations unveiled this week could lead to an average £1,000 increase in the annual earnings of temporary and contract workers.

Under the new rules, individuals with irregular or zero working hours, or those employed seasonally, will now be permitted to receive ‘rolled-up’ holiday pay.

This method involves incorporating holiday pay into their standard wages rather than providing a separate payment during their time off. Consequently, workers will receive a slightly higher hourly rate, and businesses will no longer need to calculate holiday entitlement separately.

The current prohibition on rolled-up holiday pay stems from a 2006 European Court ruling expressing concerns that workers might be disincentivised to take leave, as they could earn more by continuing to work.

While the government initially proposed extending rolled-up holiday pay to all workers, it has decided against it, deeming it less advantageous for those with regular hours.

New year regulations

These regulations, effective from January 1, 2024, mark a significant shift in holiday laws that will impact numerous employers. The changes also introduce a new method for calculating holiday entitlement.

The swift implementation follows the government’s release of two sets of proposals earlier this year aimed at reforming holiday rights. The government has now responded and provided draft regulations.

Key features of the new Employment Rights Regulations 2023

  1. Retaining two distinct ‘pots’ of annual leave with different pay rates (4 weeks at the normal rate of pay and 1.6 weeks at the basic rate of pay).
  2. Introducing rolled-up holiday pay for irregular hour workers and part-year workers, encompassing certain agency workers.
  3. Plans to legislate an accrual method, calculating entitlement at 12.07% of hours worked in a pay period for irregular hour workers and part-year workers from the first year of employment onward.
  4. Simplifying Transfer of Undertakings (Protection of Employment) regulations and reducing administrative burdens for small businesses.

Tania Bowers, the global public policy director at The Association of Professional Staffing Companies (APSCo), expressed satisfaction with the inclusion of rolled-up holiday pay in the regulations, emphasising its necessity for protecting agency and umbrella workers.

She urged recruiters and umbrella companies to communicate the importance of workers taking their owed holiday or pay in accordance with the Working Time Regulations.

Helen Greaney
Helen Greaney
I'm a journalist with more than 18 years' experience on local, regional and national newspapers, as well as PR and digital marketing. Crime and the courts is my specialist area but I'm also keen to hear your stories concerning Manchester and the greater North West region.
Latest

Progressive Leadership Festival to debut in May with focus on purpose-driven business

A new gathering aimed at redefining the role of business in society will take place this spring as the Progressive Leadership Festival makes its...

Manchester data & mar-tech disruptor earns elite business top 100 spot

Manchester's leading UK data and mar-tech firm, Go Live Data, has been named in the prestigious Elite Business Top 100 UK Businesses 2026, recognising the company’s...

Madrid at the Table: What Its Restaurants Reveal That Manchester Understands

There is a particular hour in Madrid — somewhere between dusk and full dark — when the city seems to tilt toward its restaurants....

CHANCE CLEAN CIDER becomes headline sponsor in first major festival partnership

CHANCE CLEAN CIDER, the UK’s first dedicated non-alcoholic cider brand, has confirmed its first major food festival sponsorship. Marking a key step for both the...
Subscribe to our newsletter
Business Manchester will use the information you provide on this form to be in touch with you and to provide updates and marketing.
Don't miss

Local backing confirmed as Wigan Business Expo returns to The Edge Arena

A tender support firm based in Wigan has confirmed its sponsorship of the Wigan Business Expo, a well-established networking event open to companies from...

Progressive Leadership Festival to debut in May with focus on purpose-driven business

A new gathering aimed at redefining the role of business in society will take place this spring as the Progressive Leadership Festival makes its...

CHANCE CLEAN CIDER becomes headline sponsor in first major festival partnership

CHANCE CLEAN CIDER, the UK’s first dedicated non-alcoholic cider brand, has confirmed its first major food festival sponsorship. Marking a key step for both the...

Madrid at the Table: What Its Restaurants Reveal That Manchester Understands

There is a particular hour in Madrid — somewhere between dusk and full dark — when the city seems to tilt toward its restaurants....

More News

Progressive Leadership Festival to debut in May with focus on purpose-driven business

A new gathering aimed at redefining the role of business in society will take place this spring as the Progressive Leadership Festival makes its...

Manchester data & mar-tech disruptor earns elite business top 100 spot

Manchester's leading UK data and mar-tech firm, Go Live Data, has been named in the prestigious Elite Business Top 100 UK Businesses 2026, recognising the company’s...

Local backing confirmed as Wigan Business Expo returns to The Edge Arena

A tender support firm based in Wigan has confirmed its sponsorship of the Wigan Business Expo, a well-established networking event open to companies from...