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

National Lottery announces major Lotto change set to bring more chances to win

The change will come into effect on June 7Then in the second round, the same thing will happen again. The National Lottery explains: "A...

Brighton vs Manchester United LIVE score and goal updates as Michael Carrick makes three changes

It's the final matchday of the 2025/26 Premier League season and Manchester United will end their campaign with a trip to Brighton.Michael Carrick has...

Makerfield by-election LIVE as first poll shows Andy Burnham and Reform in knife-edge race

The Liberal Democrats have announced the party's candidate for the upcoming Makerfield by-election as Stockport councillor Jake Austin.Councillor Austin was born in the constituency...

Jet2 flight from Tenerife in mid-air 'chaos' as pilot suffers medical emergency

A Jet2 flight from Tenerife to Birmingham was forced to divert to Porto after the pilot suffered a suspected heart attack mid-air22:04, 23 May...
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

Major emergency response after child falls off bike in Oldham

Police and paramedics descended on Frederick Street after reports of a potential crashThe child is not believed to have suffered life-threatening injuries. North West...

Manchester Agency Eight Engines Shortlisted for GMCC Small Business of the Year Award

Manchester-based video marketing agency Eight Engines has been named a finalist for the Greater Manchester Chamber of Commerce (GMCC) Small Business of the Year...

White House 'on lockdown' as gunshots rings out and people rushed inside

It is currently unclear where the gunshots have originated from and what the security incident is in relation toPeter Hennessy UK & World News...

Property Investment Manchester: Why the City Continues to Attract Investors

Manchester’s property market has spent years building a reputation as one of the UK’s strongest regional investment locations. In 2026, that reputation continues to...

More News

National Lottery announces major Lotto change set to bring more chances to win

The change will come into effect on June 7Then in the second round, the same thing will happen again. The National Lottery explains: "A...

Brighton vs Manchester United LIVE score and goal updates as Michael Carrick makes three changes

It's the final matchday of the 2025/26 Premier League season and Manchester United will end their campaign with a trip to Brighton.Michael Carrick has...

Makerfield by-election LIVE as first poll shows Andy Burnham and Reform in knife-edge race

The Liberal Democrats have announced the party's candidate for the upcoming Makerfield by-election as Stockport councillor Jake Austin.Councillor Austin was born in the constituency...