In an acknowledgement that the law is unclear, the government has recently issued a practical guide for employers to help them calculate statutory holiday pay for workers who do not have fixed hours or pay.
Generally, when a worker takes a week’s holiday they receive the same pay at the end of the month as they would normally get. However, if the worker does not work fixed or regular hours, the employer has to look back at their pay for the previous 12 paid weeks (known as the holiday pay reference period) to calculate what that worker should be paid for a week’s leave.
The question then arises – what happens if the employer does not have 12 weeks of pay data to use in order to calculate holiday pay? As the legislation does not address what to do in those circumstances, the government has issued this guidance, with sections designed to respond to specific questions employers may have when calculating holiday pay for individuals who are working without fixed hours or fixed rates of pay.
At the same time, it published research providing the results of a poll which surveyed over 2000 British workers about their perceptions and understanding of holiday pay entitlement. This found that:
- 52 per cent of workers incorrectly thought that they had to have worked at least three months before becoming entitled to holiday pay
- 58 per cent of workers thought that holiday pay was earned for every hour worked
- 35 per cent of workers wrongly thought that only people in permanent jobs were entitled to holiday pay
- 50 per cent of respondents thought that workers on zero hours contracts did not qualify for holiday pay
The government has legislated to increase the holiday pay reference period from 12 to 52 weeks. This change is designed to even out the seasonal variation in pay for many casual workers.
Alongside this change, the government has also clarified that the holiday pay reference period should include as many whole weeks of pay information as are available (if less than 52 weeks). This change will become effective from 6 April 2020.
Matthew Pull, of Thompsons Solicitors, said: “Calculating the correct holiday pay for individuals without fixed hours or rates of pay can be complicated, therefore any additional guidance to help ensure employers correctly calculate this is welcome. It is clear however from the research outcomes the Government still has some way to go to ensure that irregular workers are aware of their rights in respect of holiday pay from day one of any contract”
The guidance in full can be read on the government website.