Changes to holiday pay entitlement could save employers up to £248m

Changes to the way holiday pay is calculated for irregular and part-time workers could save businesses up to £248m a year, according to government figures.

Joanne Stronach Director and Head of Employment & HR reports on this recent case.

The government says it is exercising its Brexit freedom to change how holiday entitlement is calculated for people who do not work full-time throughout the year. This includes shift-workers, school employees and those on zero-hours contracts.

It means that such workers will no longer receive full holiday rights at the start of the year as full-time workers do. Instead, they will accrue entitlement gradually throughout the year.

The move follows the Supreme Court case in July 2022 involving Lesley Brazel, a music teacher on a zero-hours contract. The court ruled that she should get the same amount of holiday pay as her colleagues on full-time contracts at the school where she worked.

The Department for Business and Trade says it will issue new rules to overturn the court’s ruling to allow companies to issue holiday entitlement and pay on a pro-rata basis. It has published an impact assessment outlining why it considers the changes are necessary

A government spokesperson said: “We are reforming this legislation to make overtime, holiday pay and entitlement legislation less complex and easier for employers to follow.”

If you would like more information about the issues raised in this article or any aspect of employment law please contact Joanne on 01228 516666 or click here to send her an email.