In January 2024 HMRC and The Dept. of Business and Trade released new guidance on Holiday Accruals for irregular (hourly) paid employees.
You can read the full guidance HERE
This means that any holiday years commencing AFTER April 1st 2024 will be subject to these legislation changes introduced for irregular hours workers.
What does this mean for you and your teams?
The main change focuses around the accrual of holiday for irregular hours workers. This will now be accrued and tracked in hours, which you will see evidence of on your EMPLOYEE CURRENT HOLIDAY YEAR SUMMARY box within each employee’s record.
To minimalise the impact to the teams, we have tried to make this as simple as possible for users and will be converting these accrued hours into equivalent DAYS ACCRUED based on an employee’s average number of hours worked per day over the 52 worked week reference period, as outlined and recommended by HMRC to quantify the holiday pay due. This is the same period that’s used to calculate the DAILY HOLIDAY RATE as is currently the case.
(If the employee has been in employment with you for less than 52 worked weeks, it will use the period since the start of employment to calculate this)
This is a rolling calculation and will constantly change based on the latest 52 worked week period, to ensure the most accurate of calculations for your days accrued and holiday day rate.
This means that your employees can still request holidays in days/half days without them or their managers having to concern themselves with working out the number of hours holiday that should be paid for that period and the scheduling of your teams remains clear when planning your rotas.
How is it calculated?
Accrued Hours - This is the hours an employee has worked multiplied by 12.07% as advised in the Holiday Accrual guidance from GOV.UK.
Equivalent Annual Entitlement - This is the number of equivalent days holiday that the employee could be entitled to based on their working patterns of the last 52 worked weeks; PLUS it takes into account and days adjustments that have been added in for the employee.
This value could change as working patterns fluctuate for the employee.
Equivalent Days Accrued - This is the accrued hours converted to days based on the employee's average worked hours from the last 52 worked week reference period AND any leave accrued whilst on statutory leave (SMP, SPP, SSP etc)
Average Daily Rate - The average daily rate is calculated using the daily earnings for each employee for the past 52 worked week reference period to get the employee's average pay per day for the purpose of paying out holiday taken.
If you have any questions please don’t hesitate to contact our team.