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From 1st January 2024, the Government introduced holiday pay and entitlement reforms. They set out the changes to the Working Time Regulations regarding holiday pay entitlements, calculations and leave carry over.
While many employers have already asked about entitlements and holiday pay, there is an important principle buried within the amendments which needs action from every employer every year.
First of all, the new rules lay out in what circumstances leave may or may not be carried over.
In a nutshell, these are the current rules:
Generally, where a contract allows it, up to 8 days can be carried over if the employer only provides the statutory minimum 5.6 weeks (including Public/Bank Holidays) leave per year.
If a sick employee has been unable to take holiday, up to 20 days can be carried over.
For those on “Family Friendly” Leave, i.e. maternity leave, shared parental leave, adoption leave, up to 28 days can be carried forward.
The new rules also provide some quite stringent conditions under which employees might be able to carry over almost all of their leave, particularly when the employer has prevented them from doing so.
A worker can automatically carry forward all leave if the employer has:
Refused to pay leave entitlement.
Not given the worker a reasonable opportunity to take their leave.
Not encouraged them to do so.
Not informed them untaken leave must be used before the end of the leave year to prevent it from being lost.
While most reasonable employers will recognise the first two points as being fair, and probably the third one as well, they might well fall foul of the last one.
The main issue is that employers need to be proactive in reminding their employees about their holiday entitlement, and the fact that they need to use it up, otherwise they may lose it. We believe it will no longer be sufficient that your handbook has a “use it or lose it” clause, but every organisation needs to communicate with their employees at least once, probably twice a year, to remind them to take holiday, as the consequences of not doing so is that the unused leave days will be lost.
What does this mean in practice? So long as you have a set holiday year which is the same for every employee, then make sure you write to them around halfway through the year to remind them to book holiday, and then probably do the same with three months to go.
Obviously, some employers may have slightly different needs. We think of retailers, café’s, restaurants and hotels that are particularly busy over the Christmas period, and who have holiday years that run from 1st January to 31st December. Knowing you have a particularly busy six weeks at the end of the year means you will probably have to write to them at least four months before the end of the year to make sure they take their holiday.
We remind employers of the following:
It is the employer’s responsibility to ensure their staff take their annual leave every year.
If they prevent their staff from doing so, then leave must be carried over.
Set up a system that reminds your employees at least twice a year of the need to take their holiday within the year or lose it.
If necessary, enforce holiday dates by making sure that employees are given twice the amount of notice as leave you wish them to take. For example, you can write telling them that they are to use up a week’s leave on dates you have set for them, providing you have given them at least two weeks’ notice of this intention.
Clients are welcome to raise any concerns with our Consultant team, who would be pleased to advise you on any element of the issues arising from this newsletter.
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