{"id":748,"date":"2024-05-16T12:27:05","date_gmt":"2024-05-16T11:27:05","guid":{"rendered":"https:\/\/sense.hr\/blog\/?p=748"},"modified":"2024-05-16T12:27:06","modified_gmt":"2024-05-16T11:27:06","slug":"how-to-calculate-rolled-up-holiday-pay-under-new-2024-legislation","status":"publish","type":"post","link":"https:\/\/senseworkplace.com\/blog\/how-to-calculate-rolled-up-holiday-pay-under-new-2024-legislation\/","title":{"rendered":"How to calculate rolled-up holiday pay under new 2024 legislation"},"content":{"rendered":"\n

If you employ staff on irregular hours or a seasonal basis, you should familiarise yourself with the \u2018Rolled-up\u2019 holiday concept. This is when an employee is paid additional money each month to cover their holiday pay. This is instead of them physically taking an annual leave day and receiving their holiday pay when they go on an annual leave, (like a full-timer or regular hours worker).<\/p>\n\n\n\n

Rolled-up holiday pay has historically been a controversial practice<\/h2>\n\n\n\n

Rolled-up holiday pay is a very convenient and pragmatic way of administering holidays for irregular-hours workers who don\u2019t have predictable working days on which to schedule annual holidays.<\/p>\n\n\n\n

However, well-being advocates argue that this rolled-up holiday pay can lead to employee burnout as employees may be tempted to boost their salary by simply not taking their accrued holiday.<\/p>\n\n\n\n

Despite this, irregular-hours employees have historically appreciated the option to do this, and potentially more so in the cost-of-living crisis environment. Subsequently, even legal commentators concede anecdotally<\/a> that the practice of paying out rolled-up holiday pay to irregular and seasonal workers has been widespread for years, even though the government has appeared to frown on this practice.<\/p>\n\n\n\n

The government now recognises the value of rolled-up holiday pay<\/h2>\n\n\n\n

Because of the complications around calculating annual leave for irregular-hours workers versus regular-hours workers, the government has now chosen to support this practice of rolled-up holiday pay.<\/p>\n\n\n\n

From 1st April 2024, the new legislation states that rolled-up holiday pay can now be used to distribute holiday allowance to irregular hours and seasonal workers. Experts suggest that these changes are going to be met with widespread approval from workers and employers.<\/p>\n\n\n\n

We, therefore, thought it timely to set out how to calculate rolled-up holiday pay under this new legislation.<\/p>\n\n\n\n

4 rules around paying rolled-up holiday pay<\/h2>\n\n\n\n

ACAS outlines four specific measures<\/a> that must be applied to ensure that holiday pay is distributed in line with the new employment legislation:<\/p>\n\n\n\n

    \n
  1. Rolled-up holiday pay accrues, (and should therefore be calculated), at a rate of 12.07% of actual hours worked in a pay period. This pay period is typically 1 calendar month in the UK but can sometimes be as short as a week.<\/li>\n\n\n\n
  2. It should be paid at the same time that the worker is paid for actual work done in that pay period.<\/li>\n\n\n\n
  3. It should be shown as a separate payment on the worker\u2019s pay slip.<\/li>\n\n\n\n
  4. The employer must pay the worker holiday pay in the pay periods when they’re off sick or on statutory leave, (e.g. maternity, paternity, or carers leave).<\/li>\n<\/ol>\n\n\n\n

    Example of rolled-up holiday pay in practice<\/h2>\n\n\n\n

    You have a casual worker called Alex, who you want to pay rolled-up holiday pay. In May Alex earns \u00a31,000. Based on the 12.07% accrual method, this casual worker should receive \u00a3120.70 rolled-up holiday pay on top of the \u00a31,000 they earned in May. This should be listed as a separate item on their pay slip.<\/p>\n\n\n\n

    Let\u2019s say in June that Alex then works for 3 weeks, takes 1 week\u2019s holiday, and subsequently earns \u00a3750. They should receive \u00a390.53 rolled-up holiday pay in addition to the \u00a3750 they earned in June. They will not receive any pay for their 1-week holiday like a full-time or regular hours employee would.<\/p>\n\n\n\n

    Contractually enhanced holiday<\/h2>\n\n\n\n

    The 12.07% figure is based on the worker’s statutory leave allowance of 5.6 weeks a year. This reduces a worker\u2019s total working weeks in a year to 46.4 (52 weeks in a year minus 5.6 weeks of leave). 12.07% of 46.4 is 5.6.<\/p>\n\n\n\n

    However, some organisations may offer their regular worker enhanced holiday allowances, meaning they have more than the minimum holiday entitlement. This must be reflected in their rolled-up holiday pay.<\/p>\n\n\n\n

    To find the relevant multiplier percentage for a worker with an enhanced holiday allowance you would do the following calculation<\/a>.<\/p>\n\n\n\n

    Let\u2019s assume the worker is entitled to 30 days, or 6 weeks, leave. The calculation would be as follows:<\/p>\n\n\n\n

    6 \u00f7 46 = 0.1304<\/p>\n\n\n\n

    0.1304 x 100 = 13.04<\/p>\n\n\n\n

    When calculating this worker\u2019s rolled-up Holiday pay, HR Managers<\/strong> should use this 13.04% figure which reflects the contractual enhancement of holiday allowance, (and not the statutory 12.07% figure).<\/p>\n\n\n\n

    Paying holiday pay when on statutory leave<\/h2>\n\n\n\n

    As we mentioned earlier, HR Managers<\/strong> should note that rolled-up holiday pay should still be paid when the employee is on statutory leave. The employee should be paid the average amount of holiday pay they received in the 52 weeks before the sick leave or statutory leave started.<\/p>\n\n\n\n

    For example, if your employee is paid weekly and takes two months off sick and the average holiday pay over the previous 52 weeks was \u00a352 then you must pay them \u00a352 each week they are off sick.<\/p>\n\n\n\n

    Further information on this topic can be found on the ACAS<\/a> and or the Government<\/a> website.<\/p>\n","protected":false},"excerpt":{"rendered":"

    For casual or seasonal workers, holiday entitlement can be complicated. Here\u2019s how to simplify that, with a process called \u201crolled-up holiday pay\u201d.<\/p>\n","protected":false},"author":7,"featured_media":749,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-748","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-compensation-rewards"],"yoast_head":"\nHow to calculate rolled-up holiday pay<\/title>\n<meta name=\"description\" content=\"For casual or seasonal workers, holiday entitlement can be complicated. 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