Millions of workers to see cash boost after new holiday pay rules come in next month

From April 1, temporary, irregular, and part-year workers will be able to have their holiday pay paid like permanent employees

Over one million workers could be “thousands” better off under new holiday pay rules which will be introduced next month.

From April 1, temporary, irregular, and part-year workers will be able to have their holiday pay paid like permanent employees through “rolled-up” pay”.

Currently, the majority of temporary workers accrue their holiday pay – so your pay is effectively “banked” and held until you take the holiday due to you. Rolled-up holiday pay is when holiday pay gets paid to workers as part of their normal pay, so throughout their employment, as opposed to it being paid later when they take a holiday.

Originally, rolled-up pay in the UK was deemed “unlawful” but last year the change was announced alongside a raft of other proposals as part of the Government’s plan for “smarter regulation” after leaving the European Union (EU). The change was confirmed in guidance reforms published by the Department for Business and Trade this January.

The new rules will apply to workers whose leave starts on or after April 1 2024. This means that, if an employer’s holiday year follows the calendar year and starts on January 1, these changes will not take effect until 1 January 2025. If it starts after April 1 then it will take effect from this year.

Campaigners have argued that many temporary workers miss out on this money due to them not realising they were entitled to it. Those missing out on their holiday pay are usually workers who are employed by an umbrella company or through a recruitment agency.

According to the official guidance, an “irregular hours worker” worker is classed as someone who has a different number of working hours each week. The official guidance notes this as including those on zero-hour contracts. “Part-year workers” are classed as people who do work only at certain times of the year. For example, this would include a person who works picking fruit and vegetables during the spring and summer months.

Julia Kermode, founder of IWORK which is the body that champions temporary and independent workers said the change would benefit millions of workers in the UK potentially by “thousands”.

She told the Mirror: “For far too long temps have been denied their holiday because, unbeknownst to them it has been accrued, or saved up, elsewhere in order to be paid when they take a break. But this misses a fundamental point – that most temps don’t actually take holiday mid-assignment. And once the assignment has finished temps move on to the next role without knowing that there is unpaid holiday owed to them.

“The situation is open to abuse by profiteering agencies and umbrellas that omit to tell temps that holiday has been accrued, or how to claim it. In a minority of cases agencies and umbrellas conspire to make it difficult for temps to receive what is owed, and then split the proceeds making a healthy profit.

“Not only that, this can be done perfectly legally if the correct loophole is chosen. With rolled-up holiday now being officially legitimate, temps can receive it at the same time as their normal wages, and there is no excuse to continue denying them their hard-earned cash.”