7.2 C
Manchester
Wednesday, November 26, 2025
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

Bolton’s business community gathers for official launch of The Wellsprings

Bolton’s entrepreneurs, business leaders, councillors and more, recently came together to celebrate the official launch of The Wellsprings, the town’s new office, meeting and...

Fablr named finalists at Manchester Culture Awards

Fablr and The Modernist Society have been named finalists at the Manchester Culture Awards 2025 - an achievement in its own right - in the...

Money Wellness Launches New Tool Highlighting the Hidden Impact of Christmas Debt

Money Wellness has unveiled a free Christmas Debt Calculator that shows how long festive borrowing might take to repay and how much interest could...

The 6 best Kettering garages for reliable, worry-free car repairs

Looking for reliable, worry-free car repair services in a world of quick fixes and DIYs may seem like finding a needle in a haystack....
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

Selling firewood online: What products to offer customers

In recent years, the popularity of online sales of heating products has increased significantly. There is a growing demand among people to find an...

How London became the world’s creative hub

Creativity flows through London's veins. From its art schools to its advertising agencies, the city has built a reputation for turning ideas into cultural...

What to buy her for Christmas 2025

Stuck on what to get the lovely women in your life this Christmas? From luxurious beauty rituals to stylish home must-haves, our curated 2025 gift...

Fablr named finalists at Manchester Culture Awards

Fablr and The Modernist Society have been named finalists at the Manchester Culture Awards 2025 - an achievement in its own right - in the...

More News

The Cost of Movement in a Changing Economy

Running a business in 2025 feels like juggling fire. Costs are up. Margins are tight. And fuel? Still one of the biggest headaches. Whether...

Youtility Strengthens Leadership Team with Appointment of Vijay Perincherry as Chief Data Scientist

Behavioural analytics company Youtility has announced the appointment of Vijay Perincherry as its Chief Data Scientist. The US and UK-based firm delivers advanced behavioural...

The Manchester Screen becomes the largest combined banner and digital billboard in the UK

The Manchester Screen, one of the UK’s most iconic out-of-home advertising sites, has entered a bold new chapter under fresh ownership. The striking 306m2 digital...