Payroll

Part-year worker holiday pay and entitlement clarification

The guidance for the new holiday pay and entitlement reforms, has been updated by the Department for Business and Trade (DBT). The new rules, which start coming into effect from 1 April 2024, left payroll professionals with questions following the release of DBT’s guidance.

In particular, whether term-time workers would qualify as a part-year worker. A worker is part-year if “in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.”

It was therefore considered that a term-time worker, paid in equal instalments across the year, would not satisfy this requirement.

The guidance has now been updated to include the below clarification:

“The regulations require that there must be a period of at least one week ‘for which they are not paid’ which means that it would still be possible for a worker to be paid ‘during’ that period so long as there is no expectation of them working in that period and nor are they receiving payment ‘for’ that period.”

It is therefore now accepted that a part-year worker may be paid in equal instalments across the year and still satisfy the description provided within the legislation.