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

Contractors must prioritise safety before entering occupied properties, warns Timberwise chief

Property care expert says better planning is essential to protect homeowners, vulnerable residents and the wider public during specialist treatment work A leading UK property...

Select events series launched to highlight home care business opportunities

The home care sector offers great opportunities for ambitious investors from outside the sector to thrive. Now Walfinch home care is launching a series of...

New audit findings reveal growing allergy awareness gap across UK hospitality sector

MANCHESTER, UK. June 25, 2026 – Fresh audit data from Safe to Trade is drawing attention to a growing gap between allergen management policies...

Potatoes revealed as an unexpected summer budget booster, says Albert Bartlett expert

EAST SUSSEX, UK, June 25, 2026 – With temperatures climbing across the UK once again, households are being encouraged to look at one everyday...
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

Select events series launched to highlight home care business opportunities

The home care sector offers great opportunities for ambitious investors from outside the sector to thrive. Now Walfinch home care is launching a series of...

Contractors must prioritise safety before entering occupied properties, warns Timberwise chief

Property care expert says better planning is essential to protect homeowners, vulnerable residents and the wider public during specialist treatment work A leading UK property...

Scientists Turning to Unapproved AI as Laboratory Systems Fall Short, Study Finds

LONDON, UK. June 22, 2026 - New research commissioned by Sapio Sciences indicates that unofficial AI use has become commonplace in laboratories. The study...

Low-Cost VPS Hosting Could Expose Businesses to Expensive Security Risks, Expert Says

Businesses choosing low-cost Virtual Private Server (VPS) hosting to reduce IT expenses may be overlooking security and maintenance responsibilities that could result in far...

More News

Select events series launched to highlight home care business opportunities

The home care sector offers great opportunities for ambitious investors from outside the sector to thrive. Now Walfinch home care is launching a series of...

Australian Entrepreneur James Sackl Says Time Is More Valuable Than Saving Dollars

MELBOURNE, AUSTRALIA, June 25, 2026 – Melbourne technology entrepreneur James Sackl has released a new essay challenging the long-standing belief that careful saving is...

BNKer Announces London Expansion

Manchester-based BNKer announces its expansion into London, bringing its pioneering in-building self-storage solution to some of the capital’s most high-density residential developments. MANCHESTER, UK. June...