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

Microsoft Awards Managed Partner Status to BCN

MANCHESTER, UK, July 30, 2026 – Microsoft has recognised BCN as a Microsoft Managed Partner, reinforcing the company's position as one of the UK's...

Winchester cleaning business honoured for excellence in customer care

WINCHESTER, UK, July 21, 2026 - Squeaky Clean Homes has received recognition for its commitment to delivering exceptional customer service after taking home a...

Caroola Climbs to 34th in The Sunday Times Top 100 Apprenticeship Employers, Ranking Above the Bank of England and NHS

The North West accountancy and payroll group has now appeared in the national rankings for six consecutive years, rising from 50th to 34th over...

Manchester Businesses Turn to Vehicle Tracking as Fleet Efficiency Becomes a Priority

Manchester's delivery vans, builders' trucks, and service vehicles are quietly getting an upgrade. Not new engines. New eyes. Across the city, more and more companies...
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

Why Manchester businesses are rethinking employee vision care as part of workplace wellness

Workplace wellness has changed shape across the North West over the past few years. Flexible working, mental health support, and a wider mix of...

Beyond glasses: Exploring vision correction and cosmetic eyewear options

Glasses have long been the default answer to poor eyesight, but they are no longer the only practical choice. Advances in lens technology mean...

Microsoft Awards Managed Partner Status to BCN

MANCHESTER, UK, July 30, 2026 – Microsoft has recognised BCN as a Microsoft Managed Partner, reinforcing the company's position as one of the UK's...

Winchester cleaning business honoured for excellence in customer care

WINCHESTER, UK, July 21, 2026 - Squeaky Clean Homes has received recognition for its commitment to delivering exceptional customer service after taking home a...

More News

Microsoft Awards Managed Partner Status to BCN

MANCHESTER, UK, July 30, 2026 – Microsoft has recognised BCN as a Microsoft Managed Partner, reinforcing the company's position as one of the UK's...

Winchester cleaning business honoured for excellence in customer care

WINCHESTER, UK, July 21, 2026 - Squeaky Clean Homes has received recognition for its commitment to delivering exceptional customer service after taking home a...

Caroola Climbs to 34th in The Sunday Times Top 100 Apprenticeship Employers, Ranking Above the Bank of England and NHS

The North West accountancy and payroll group has now appeared in the national rankings for six consecutive years, rising from 50th to 34th over...