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

How Manchester is shaping the next wave of AI

Manchester has a habit of being underestimated. People still talk about UK technology as if it is a London story with a few regional...

How to know when your commercial van needs a turbo replacement

For most van drivers, the turbocharger sits somewhere in the background. It does its job, you do yours, and neither of you gives the...

Fewer People Are Claiming Compensation Despite Rising Injury Concerns, Says Mooneerams Solicitors

CARDIFF, UK. June 3rd, 2026 - Personal injury claims have fallen dramatically over recent years, despite large numbers of people continuing to suffer injuries caused...

Daniel and Rachel Wu Introduce Online Coaching Academy as Success Elevation Continues Growth

Success Elevation Coaching is preparing to enter its next phase of development with the launch of a dedicated online learning platform. Founded by London-based...
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

Fewer People Are Claiming Compensation Despite Rising Injury Concerns, Says Mooneerams Solicitors

CARDIFF, UK. June 3rd, 2026 - Personal injury claims have fallen dramatically over recent years, despite large numbers of people continuing to suffer injuries caused...

Medium‑Sized Businesses Reassess SharePoint as Governance Gaps Emerge

London, UK – 28 May 2026 — Rising search interest around SharePoint best practices is drawing attention to a recurring challenge for medium‑sized organisations: how...

JVR Consultancy highlights the operational complexity of rail supplier compliance requirements

Compliance advisory firm JVR Consultancy is encouraging organisations operating within the UK rail sector to take a more structured approach to supplier assurance and...

Orbit Spaces Reveals First Look at New Floor of 55 King Street Flexible Workspace

Manchester-based flexible workspace provider Orbit Spaces has revealed a first look at the new floor of its expanded site at 55 King Street, ahead of...

More News

How Manchester is shaping the next wave of AI

Manchester has a habit of being underestimated. People still talk about UK technology as if it is a London story with a few regional...

Fewer People Are Claiming Compensation Despite Rising Injury Concerns, Says Mooneerams Solicitors

CARDIFF, UK. June 3rd, 2026 - Personal injury claims have fallen dramatically over recent years, despite large numbers of people continuing to suffer injuries caused...

Daniel and Rachel Wu Introduce Online Coaching Academy as Success Elevation Continues Growth

Success Elevation Coaching is preparing to enter its next phase of development with the launch of a dedicated online learning platform. Founded by London-based...