Holiday Pay Entitlement

From 6 April 2020, “the government will be changing the holiday pay reference period that applies for calculating an average week’s pay where a worker has variable remuneration” comments Martin Redfern Taxation Manager at ASE Plc.

Variable remuneration exists where there are normal working hours, but the remuneration varies due to:

1. The amount of work completed.
2. The time the work is completed
3. Bonuses or commissions are part of the employees remuneration

This will be happening as part of the measures proposed to improve transparency between employers and individuals in the labour market.

With workers that have been with their employer for at least 52 weeks, the reference period will be increased from 12 weeks to 52 weeks, whereas workers who have been with their employer for less than 52 weeks will have a reference period of the number of weeks for which they have been employed with their current employer

“These changes will allow for better reflection of the seasonal nature of much casual and zero hours work, as well as reducing the incentives for employers to either encourage workers to take annual leave before busy periods or to discourage workers from taking leave just after busy periods” adds Martin.

Martin concludes that good practice should ensure that “employers keep records of employee pay for the 52 weeks prior to 6^th April 2020 and to continue to do so thereafter”.

The UK Government plan to produce new guidance steps for employers on how to calculate holiday pay, as well as increasing awareness of holiday pay entitlements to both employers and workers.

 

In case of any questions please contact at Chris.Cummings@ase-global.com 
Tel: +44 (0)161 493 1930