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

SAVVY Collective unveils refreshed identity and broader business offering for independent hospitality operators

SAVVY Collective has introduced a refreshed brand and a wider strategic direction as it strengthens its support for independent hotels, leisure businesses and lifestyle...

Access Holdings and Coronation Group Celebrate Enduring Legacy of Nigerian Modernism

LONDON, UK. July 3rd, 2026 - Access Holdings Plc and Coronation Group hosted a private reception at Tate Modern, London, to celebrate the enduring legacy of Nigerian Modernism, one...

Why aggregate screen efficiency affects your bottom line

Screening looks like a simple job. Feed material onto a deck, let the right sizes fall through, and send the oversize on for another...

DeliverMyMotor Invests in Platform Upgrades as Vehicle Delivery Demand and Revenue Continue to Grow

DeliverMyMotor Invests in AI and Platform Upgrades as Vehicle Transport Marketplace Continues Strong Growth LONDON, UK. July 3rd, 2026 - DeliverMyMotor, the UK's online vehicle transport...
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

Louis Mulholland Unveils Upcoming Historical Novel Perfectly Imperfect

An Emotional Story of Strength, Acceptance and the Need to Belong UK, July 3, 2026 – Author Louis Mulholland will publish his latest novel, Perfectly...

Copious Ltd launches Litigated.com, expanding AI technology from housing disrepair to legal intelligence

Copious Ltd has officially launched its AI-powered legal intelligence system, Litigated.com. Designed to help law firms process complex evidence faster, Litigated can reduce administrative workload...

Why aggregate screen efficiency affects your bottom line

Screening looks like a simple job. Feed material onto a deck, let the right sizes fall through, and send the oversize on for another...

How to create an office people want to work in

Modern offices must prioritise well-being and engaging design to boost productivity and encourage consistent in-person attendance. Gone are the days when a desk setup and...

More News

SAVVY Collective unveils refreshed identity and broader business offering for independent hospitality operators

SAVVY Collective has introduced a refreshed brand and a wider strategic direction as it strengthens its support for independent hotels, leisure businesses and lifestyle...

Why aggregate screen efficiency affects your bottom line

Screening looks like a simple job. Feed material onto a deck, let the right sizes fall through, and send the oversize on for another...

DeliverMyMotor Invests in Platform Upgrades as Vehicle Delivery Demand and Revenue Continue to Grow

DeliverMyMotor Invests in AI and Platform Upgrades as Vehicle Transport Marketplace Continues Strong Growth LONDON, UK. July 3rd, 2026 - DeliverMyMotor, the UK's online vehicle transport...