Holiday rights if you work irregular hours or term-time only

From January 2024 the Working Time Regulations 1998 (the regulations) were amended to contain specific rules for two types of workers — ‘irregular hours’ and ‘part-year’ workers. This article looks at how those types of workers are defined, and how statutory holiday entitlement and pay is calculated for them.

What has changed?

The regulations provide a statutory minimum entitlement of 5.6 weeks’ paid holiday for all workers up to a statutory limit of 28 days per year for a full time worker. For someone working regular hours this is straightforward, but what if you don’t have a normal working week? And what if you don’t work an entire year because your workplace always closes during some of it? (Schools for example).

To make things easier for employers to calculate leave entitlement for these types of workers, the regulations have introduced two new provisions:

• instead of talking about the number of weeks of holiday you get per year, regulation 15B says your holiday accrues at the rate of 12.07% of the hours you work. If you are wondering where the figure 12.07% comes from, it is because 5.6 weeks works out as 12.07% of annual working time for a full time employee working a 5 day week. The statutory limit of 28 days still applies.
• regulation 16A gives your employer the option to include holiday pay as a 12.07% uplift to your normal pay. This is sometimes called ‘rolled-up holiday pay’. They don’t have to do this, but if they do, the part of your pay which is for holiday must be clearly itemised.

But note: these provisions only apply to you if you fall into the category of ‘irregular hours’ or ‘part-year’ worker, and they only apply from leave years that start from 1 April 2024. So if your leave year runs from 1 January to 31 December 2024, you won’t see any change until your next leave year starts on 1 January 2025.

The government has published guidance that gives examples of both irregular hours and part-year workers.

What is an ‘irregular hours worker’?

Regulation 15F(1)(a) says:

“a worker is an irregular hours worker, in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable;”

A pay period is the time covered in each payslip. For example if a person is paid weekly they have a weekly pay period or, if paid monthly, a monthly pay period.

In simple terms this definition covers workers whose pattern of working hours is not fixed by their contract. Typical examples include casual workers, agency workers or those on zero hours contracts. Even if you have a guaranteed minimum number of hours in your contract, you will still be covered if the actual number of hours you work during each pay period varies.

However it’s important to note that the definition will not cover you if you have ‘normal working hours’ in your contract, but your pay changes from time to time due to overtime or shift premiums. This is because your contractual working hours are not ‘wholly or mostly variable’.

Example: Henry has no fixed hours but is paid every two weeks. His employer has taken the option to give him rolled up holiday pay.

The first two weeks In September, Henry worked 54 hours. That is the ‘pay period’.

Henry accrues holiday at 12.07% — so for those two weeks he has accrued 12.07% x 54 = 6.5 hours. The payslip shows pay for 54 hours work, and then notes on a separate line an additional sum for 6.5 hours holiday pay.

Who is a ‘part-year worker’?

This type of worker is defined in regulation 15F(1)(b):

“a worker is a part-year worker, 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.”

Typical examples include term-time only staff in schools, and seasonal workers (for example, someone who works at a caravan park which is closed during off-peak times).

It will not include qualified teachers working in local authority schools, because their contractual terms are governed by statute and include an obligation to do some work during school closure periods.

It will include term-time only staff such as admin staff and teaching assistants — even if they get their annual pay divided into 12 monthly instalments which covers the summer break. This is because the monthly pay is only for the work done in term time and includes the annual leave entitlement.

But remember, an employer can still give a contractual right to enhanced annual leave which will ensure the statutory minimum is always met. For example, term-time only staff in local authority schools who have contracts governed by the national terms and conditions for support staff (known as the Green Book) have a more generous holiday entitlement negotiated as part of collective bargaining with the Education Unions. (Note — Academy schools are not run by local authorities, so their workers may be on different contractual terms).

Example: Felicia is a school meal assistant at an Academy School. Her contract says she is required to work 3 hours a day Monday to Friday during term time only, but her salary is paid monthly in 12 equal instalments.

Felicia will fall into the category of ‘part-year worker’. Even though her monthly pay is the same throughout the year, her annual salary will include holiday pay based on at least 12.07% of the hours she worked during term time.

How much will I be paid during my holiday?

As you can see in the example of Henry above, if your employer gives you rolled-up holiday pay the calculation is straightforward; you will receive it as an additional 12.07% pay in each payslip.

If you don’t get rolled-up holiday pay, Regulation 16 (1A) says the amount you get paid when you take holiday will be based on an average hourly rate of pay over the previous 52 weeks. Any weeks when there are no earnings or you were on statutory family leave are ignored and the employer will go further back to make up 52 weeks of paid work.

Because the rate of pay is an ‘average’ based on your past earnings, it means you may get a different hourly rate than the rate you currently get at work.

Example: Yasmin is an agency worker and gets different hourly rates of pay for different assignments. She does not get rolled-up holiday pay. Over the course of 52 weeks her average hourly rate of pay works out at £14.20 per hour. Yasmin is currently on an assignment which pays £15 per hour but when she takes a day’s annual leave she will only get paid £14.20 per hour.

How is holiday entitlement calculated when on sick leave?

The law says that workers still accrue their statutory holiday even if they are off sick (or on maternity or other statutory family leave). However if, for example you are an irregular hours worker who is on sick leave, there are no working hours to apply the 12.07% formula to. To solve this problem, regulation 15C provides that holiday pay during periods of sickness or other statutory leave will accrue at 12.07% of the ‘average hours’ per week over the preceding 52 weeks.

But please note the following:

• Unlike for the calculation of the hourly rate of pay above, weeks where no work has been done are included in the 52.
• Weeks where the worker is off sick or on maternity or other family leave, are not included — earlier weeks are then added in so that the total is as near to 52 weeks as possible.
• If the worker hasn’t been in the job for 52 weeks yet, then the average is taken over the shorter period of their employment.

Example: Jaylah is on a zero hours contract and started a new job on 1st January. They usually work between 10–15 hours per week but occasionally there is no work at all.

On 1st July Jaylah was signed off sick for a month. As Jaylah doesn’t have 52 weeks’ service, the employer can only calculate an average since 1 January — which is 26 weeks. But Jaylah had one week with no work at all, so that week is deducted. The total hours Jaylah worked in that time is 300 hours. Divided by 25 weeks, this makes an average of 12 hours a week.

For each week Jaylah is off sick in July, they will accrue holiday at 12.07% x 12 hours = 1.5 hrs. For example, over 4 weeks’ sickness absence Jaylah will accrue 6 hours of holiday.

Jaylah’s employer doesn’t have to pay rolled-up holiday pay, but if they did, Jaylah would be paid 1.5 hours each week when they are off sick.

Practical implications

If the changes apply to you, It should be easier to work out how much holiday you have accrued to date, but if your working hours are very unpredictable, it might be difficult to work out much total leave you will accrue in any given leave year. In theory you may not know until the end of the relevant leave — year when it is too late to actually take it!

The ‘use it or lose it’ rule still applies to irregular hours and part-year workers (Regulation 15D). The various exceptions that had been established by EU case law have now been formally incorporated into UK law, meaning that there is a new statutory right to carry over untaken holiday where the you couldn’t take it due to:

• being off sick or on statutory maternity or other parental leave
• your employer not giving you an opportunity to take leave, or saying you have no right to annual leave
• your employer not warning you that if you don’t take your leave you will lose it

For most ‘normal hours’ workers the carry forward is limited to 4 week’s leave (except in the case of statutory leave above) but if you are an irregular hours/part-year worker you have a more generous maximum of 28 days leave that can be carried over.

The original regulation 15 — which has not been amended for irregular hours or part-year workers — still applies regarding procedures for requesting leave. There is nothing to prevent you requesting leave before you have actually accrued it, but this may cause some problems — especially if there is no guarantee of minimum hours in your contract. You may prefer to wait until sufficient leave has been accrued before you actually take it.

Likewise if you get rolled up holiday pay, you will not get any income at all when you take leave. If you are on a low income, or find it difficult to put aside your holiday pay for any other reason, you may not be able to afford to take it until you have accrued it. In fact it may be tempting not to take any leave at all!

If you are on Universal Credit (UC) the rolled up holiday pay will be taken into account as income, and reduce the amount of your UC when at work. But when you take holiday and receive a reduced (or no) income, this should also have the effect of increasing your UC for that period. You may have obligations to work a certain number of hours as part of your UC ‘Claimant Commitment’ but you should be able to update the DWP about the reason for the reduction.

Finally, it is important to note that rolled up holiday pay is only an option open to employers — many of whom may decide not to take it up — for example if it is too much of an administrative burden to change payroll procedures.

If your employer does wish to take advantage of the new provisions, they should be consulting you about varying your contractual terms. Acas provides advice and guidance about the procedures needed for making contractual changes.

How the amended regulations will be interpreted and applied in practice is likely to give rise to some interesting legal questions as new holiday pay cases work their way through the tribunals. There may be a number of unforeseen (and perhaps unintended) consequences, which will only become apparent over time.

Lisa Crivello works as an Employment expert in the Expert Advice team at Citizens Advice

The information in this article is correct as of the date of publication

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