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

Eccles care home helps residents stay active and connected with summer programme

Residents at an Eccles based care home are enjoying a packed programme of summer events designed to keep them active, socially connected and safe...

Ripple to build on 40 years of success with Hendrix Rose PR

Retail design agency Ripple Group has appointed Manchester-based Hendrix Rose PR to help raise its national profile as the business looks to build on more than 40 years...

How is AI transforming digital business development?

Artificial intelligence has moved well beyond the experimental stage, as it now serves as a practical and widely adopted tool that drives real results...

New Prime Minister Andy Burnham reveals reshaped Cabinet

Prime Minister Andy Burnham has begun life in Downing Street after unveiling a significantly reshaped Cabinet, promising to "rewire Britain" by shifting power away...
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

New research finds over a quarter of women have considered leaving the workforce because of hormone-related symptoms

A new survey has revealed that 28% of women have considered leaving the workforce altogether because of their hormone-related symptoms. This highlights the significant impact...

How is AI transforming digital business development?

Artificial intelligence has moved well beyond the experimental stage, as it now serves as a practical and widely adopted tool that drives real results...

Mania Sports Partners with eBay for Live £20,000 World Cup Soccer Card Break

ANDOVER, UK. July 15th, 2026 -  Interest in premium sports trading cards remains at an all-time high as collectors around the world continue chasing...

Rare Mbappé, Messi and Ronaldo Cards Could Surface During Live 2018 National Treasures Break on eBay

ANDOVER, UK, July 15, 2026 - Football card collectors could witness the discovery of some of the hobby's biggest modern treasures this Sunday when...

More News

How is AI transforming digital business development?

Artificial intelligence has moved well beyond the experimental stage, as it now serves as a practical and widely adopted tool that drives real results...

The role of sustainable energy infrastructure in Manchester’s business growth

UK electricity prices for non-domestic users averaged 24.9p/kWh in the first quarter of 2024, which was up 60% compared to 2019. As competition grows...

Majority of UK mid-market firms trapped in ‘identity crisis’, new benchmark finds

More than half of the UK's mid-market B2B service businesses are failing to convert marketing investment into commercial growth because they lack brand identity,...