No-nonsense guide to the new Holiday pay law
Simplified in 10 steps:
- Stop using 12.07% of pay or hours (unlawful)
- Stop the practice of rolled-up holiday pay (unlawful)
- Stop using holiday entitlement based on hours/days worked
- Start recording weekly pay for each worker – and maintain up to 104 weeks of history alongside your current pay frequency (monthly, 2/4-Weekly etc.)
- Start calculating 1-weeks pay as the rolling average over the last 52 paid weeks (exclude unpaid weeks) or fewer weeks if you do not have 52
- Decide on a holiday year reset date – e.g. a company-wide date or personalised individual workers’ start date
- Ensure all workers receive 5.6 weeks of holiday pay entitlement per year (as calculated above) accrued in year 1 or prorated thereafter from the start date/holiday year reset date
- Decide how to convert weeks into days (or hours) e.g. 1-week = 5-days is a good starting point which allows workers to book 28 days in a year and receive 5.6 week’s pay
- Decide on which days are bookable (weekdays, weekends, public holidays)
- Allow workers to book and take holiday ensuring they do not work and are paid as above – the principle is that they need to earn the same pay while on holiday as they would at work
