12.07% Accrual Rate is back!

Holiday pay for zero hours workers

The holiday pay legislation was changed in April 2020 (read our blog), but a recently published government impact assessment has shown this to have had a number of issues. The reforms were introduced in an attempt to ensure paid holiday entitlement for all workers and also there has been some case law eg Harper Trust v Brazel.

The April 2020 legislation was very difficult for employers to comply with, especially with any pay frequency other than weekly.  It also resulted in part time workers with a regular work pattern being treated differently to those with erratic or part-year patterns.

There is also an anomaly with 5.6 weeks of paid leave per year; 4 weeks is at normal pay rates and 1.6 weeks is at basic pay.  Further clarification on the definition of normal pay is expected from the Government at a later date.  Most employers pay 5.6 weeks at the same rate anyway.

The 12.07% accrual rate is back for the workers with irregular hours or working part of the year in their first year and beyond.  Rolled up holiday pay will also be allowable again.  This will mean employers are able to return to their holiday methods prior to April 2020.

Although the 12.07% accrual rate is back the government believes there is adequate protection for workers’ rights to paid leave already in law.  This simplification should make the legislation easier to understand for both employers and employees.

It should be noted that the 52 week rule for average pay calculations is not changing.