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

New Chapter for Kirkham Grammar as International Schools Group Commits to Long-Term Investment

Kirkham Grammar School is entering an exciting new chapter following the acquisition of the school by a leading international education group. The acquisition represents...

An estimated 1.4 million children missed out on free holiday clubs last year despite being entitled to them

SALFORD, UK. July 22nd, 2026 - As millions of children across England prepare to break up for the summer holidays this week, new research reveals...

flowio Recognised as an OpenAI Select Partner for Enterprise AI Delivery

GLASGOW, UK, July 22, 2026. flowio has reached a new milestone after being recognised as an OpenAI Select Partner. The UK-based AI automation agency...

Eccles care home helps residents stay active and connected with summer programme

Residents at an Eccles based care home are enjoying a packed programme of summer events designed to keep them active, socially connected and safe...
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

How is AI transforming digital business development?

Artificial intelligence has moved well beyond the experimental stage, as it now serves as a practical and widely adopted tool that drives real results...

Groundbreaking Five-Minute Glaucoma Laser Procedure Debuts in UK and Worldwide

A world-first laser treatment that avoids the need for surgical incisions has been introduced at Centre for Sight, making the clinic the first in...

Ripple to build on 40 years of success with Hendrix Rose PR

Retail design agency Ripple Group has appointed Manchester-based Hendrix Rose PR to help raise its national profile as the business looks to build on more than 40 years...

An estimated 1.4 million children missed out on free holiday clubs last year despite being entitled to them

SALFORD, UK. July 22nd, 2026 - As millions of children across England prepare to break up for the summer holidays this week, new research reveals...

More News

New Chapter for Kirkham Grammar as International Schools Group Commits to Long-Term Investment

Kirkham Grammar School is entering an exciting new chapter following the acquisition of the school by a leading international education group. The acquisition represents...

How is AI transforming digital business development?

Artificial intelligence has moved well beyond the experimental stage, as it now serves as a practical and widely adopted tool that drives real results...

The role of sustainable energy infrastructure in Manchester’s business growth

UK electricity prices for non-domestic users averaged 24.9p/kWh in the first quarter of 2024, which was up 60% compared to 2019. As competition grows...