A new section has been created in the Employment Rights Regulations 2018 which means calculating average holiday pay changes from the existing last 12 paid weeks to 52 weeks on relevant workers; those who perform shift, casual or unmeasured work, and potentially those who are paid on an hourly contract.
It does not impact employees who are on fixed hours or salaried workers but it means that employers should review contracts, processes and systems to ensure that they correctly calculate holiday pay from April 2020.
It’s often the accuracy or lack of an employment contract compared to what happens on the ground that sees employers fall foul of minimum wage rules. This change will also affect those type of employers as they will likely incorrectly calculate holiday pay too.
In summary, the key points to note are:
- New regulations take effect from April 2020
- Affects workers who do not have fixed hours or are not salaried workers
- Instead of the current 12 paid weeks average – increase the reference period to 52 paid weeks to average weekly holiday pay
- Do not count zero weeks – go back a further week
- Maximum number of weeks to go back is 104
- New starters – average over the weeks that are available if under 52 weeks