UK Government launches holiday pay consultation

The UK Government has recently launched a consultation into how holiday pay and entitlement is calculated for part-time, temporary, and zero-hour employees. Intended to explore how the process of calculating holiday pay for these groups can be simplified, the consultation also aims to provide clarity to workers on their entitlement.

The consultation follows on from the Harpur Trust v Bazel Supreme Court judgement in July 2022, which ruled that a part-time worker must have their holiday pay calculated on the same basis as a full-time employee.

Estimated to affect between 320,000 and 500,000 term-time and zero-hour workers, it proposes to introduce a holiday entitlement reference period for part-time employees and for those who work irregular hours so that their holiday pay and entitlement is directly proportionate to time spent working. The consultation also aims to understand how entitlements are currently calculated for agency workers, how the consultation proposal will be implemented, which could potentially mean amendments to leave entitlement legislation.

The Government is currently requesting responses from employers, workers, unions, business representative groups and those who represent the interests of groups in the labourers. The consultation will be open for eight weeks and will close on 9 March 2023.

Employment solicitor, Lisa Moore, said:

The Supreme Court’s decision has caused widespread confusion for many. It has also led to an element of perceived unfairness, with some part-year workers having accrued a larger holiday entitlement than part-time workers, despite them having worked the same number of hours during the year.

Whilst the Government’s consultation is only focused on annual leave entitlement (rather than holiday pay more broadly), its aim is to help simplify calculations the rectify imbalances. In order to ensure that a part-year worker’s holiday entitlement is proportionate to the number of hours they work, it has been proposed that annual leave entitlement should be calculated by the number hours worked in the previous 52 weeks by 12.07%. This in itself raises further questions such as the practicalities of how and an employer can keep an accurate record of hours worked. However, ultimately, it is hoped that this consultation is a positive move to providing more clarity on this issue and is likely to be welcomed by most.