Payroll – Time to update your approach to holidays
There have been several recent changes in the Working Time Regulations introduced by the Government on 1 January 2024 that businesses must comply with.
The Department for Business and Trade (DBT) has released guidance detailing these reforms, which are vital for updating your payroll processes.
These key changes include:
- Clarification of Holiday Entitlement and Pay: The reforms simplify holiday entitlement and pay calculations for irregular hours and part-year workers. This includes introducing the holiday entitlement accrual method and rolled-up holiday pay.
- Revision of COVID-19 Regulations: The removal of the Working Time (Coronavirus) (Amendment) Regulations 2020 impacts the carryover of COVID-19 leave.
- Maintaining Holiday Pay Rates: The current structure of holiday pay, where four weeks are paid at the normal rate and 1.6 weeks at the basic rate, remains, along with the two distinct pots of leave.
- Defining 'Normal Remuneration': This is particularly important for calculating statutory annual leave for the four-week period.
Starting 1 April 2024, additional reforms will come into effect:
- A new method for calculating statutory holiday entitlement for irregular hours and part-year workers.
- A system for calculating leave accrual during maternity, family-related leave, or sick leave for these workers.
- The introduction of rolled-up holiday pay as an alternative method for these groups.
In light of these recent and upcoming changes to holiday accrual and pay we recommend adjusting your payroll systems accordingly.
It's also advisable to stay tuned for further clarifications and updates, especially concerning the definition of part-year workers.
Updating your payroll processes in line with these changes is not just a matter of compliance, but also a step towards more efficient and fair management of your workforce's holiday entitlements and pay.
To find out more about our dedicated payroll services, please speak to the Iceberg accountancy team.