Holiday changes for Zero Hour Employees in April

In April 2024, significant changes to the holiday entitlement for zero hour and other irregular hours staff are set to take effect, altering the landscape of holiday pay and accrual for these workers. These changes, which amend the Working Time Regulations 1998, represent a departure from previous practices and aim to simplify the process for both employers and employees.

You first need to confirm that your zero hours employees fall within the definition of irregular hours or part year workers. Irregular hours are those workers whose paid hours set out in their contract vary in each pay period; a zero hours contract would meet this definition as there is no guarantee of hours to be given each week. Part-year workers are those who are contractually only required to work for part of the year and for the remainder neither work nor receive pay. For example, a term time worker who only gets paid whilst their working would meet this definition.

The second thing you need to confirm is when the holiday year runs from and to. The changes being brought in on 1 April 2024 will apply to all holiday years starting on or after that date. So, if you have a  holiday year that runs April to March, the changes will apply immediately. If however you have a different holiday year, such as a calendar year (January – December), then the changes won’t need to apply until January 2025.

What's New? 

The most notable change is the introduction of a new method for calculating holiday entitlement for part-year and irregular hours workers, which will be based on a percentage of the hours worked. Starting from April 1, 2024, holiday entitlement for these workers will accrue at a rate of 12.07% of the hours worked during the pay period. 

Additionally, employers will have the option to choose between two methods for paying holiday pay to these workers: 

1. Holiday Accrual: Holiday can be booked as usual and paid when it is taken. 
2. Holiday Pay: Alternatively, holiday pay can be rolled up with the normal pay, meaning an additional amount is included within every payslip to cover a worker’s holiday pay. 

This second option, known as "rolled-up" holiday pay, is a significant shift from the traditional method and is designed to simplify the process for employers who find it challenging to determine when a zero hour worker is actually on leave.