Calculating fairer holiday entitlement for flexible workers in the UK
Read our recommendations to the UK’s Department for Business and Trade
Read our recommendations to the UK’s Department for Business and Trade
The UK’s Department for Business and Trade, recently launched a consultation on proposals to ensure that holiday pay and entitlement received by part-year and irregular hours workers is proportionate to the time they spend working. In our response, we welcome the opportunity to respond on behalf of the people profession and provide details on what this could mean in practice if implemented.
"For part-year workers with irregular hours, we recommend accruing holiday entitlement ‘as you go’ on a rolling basis. A 52-week leave entitlement reference period is not practical and could have unintended consequences, resulting in either too much or too little holiday entitlement being awarded."
In our letter to the Department of Business, Energy and Industrial Strategy and the Department for Business and Trade, we set out six key reasons for proposing that holiday entitlement for part-year workers and part-time workers with irregular hours should be accrued on a ‘as you go’, rolling monthly basis:
When it comes to calculating holiday pay, the most straightforward approach for employers would be to apply the same methodology to calculate both holiday entitlement and holiday pay. This would mean calculating holiday pay based on the same 12.07% calculation that employers currently use for holiday entitlement, based on basic pay and actual hours worked for the past month. Doing this would:
To inform our recommendations, we drew on a variety of sources of insight, including consultation with:
Members of the CIPD's senior reward network, which is made up of senior reward practitioners from across the private, public and voluntary sectors.
• Justine Riccomini, in her role as Public Policy Lead for the CIPD's West Yorkshire Branch, employment tax expert at the Institute of Chartered Accountants Scotland, and Board Director at the Chartered Institute of Payroll Professionals.
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