The rules on how employers calculate holiday pay for some construction workers is set to change, with new regulations coming into effect in April 2020.
Working out holiday pay for employees that have fixed-hours is straightforward – if they are paid £500 for one week’s work, then they should be paid £500 per week when they’re on holiday.
However, for workers with irregular hours, such as those on zero-hours contracts where their pay is different each week, then this can be more difficult to calculate.
In this case, holiday pay is based on weekly earnings. The current rules state that you must take the average pay of the worker over the 12 weeks prior to their holiday.
This is set to change in April 2020, with employers now taking the average weekly wage over the 52 weeks prior to the worker’s annual leave to calculate their holiday pay rate.
Samantha Randall, a Solicitor with Palmers who specialises in employment law, explained: “There are additional duties for employers to keep in mind, with a focus on keeping accurate records of working hours over the year.
“The changes to holiday pay rules are significant and it is important to bear in mind that if you underpay your workers, even accidentally, there are grounds for taking you to an employment tribunal.”
There are a variety of online tools and software platforms that allow you to track working hours, such as overtime during busy periods.
Compulsory overtime must be considered in holiday pay, and it may be prudent to also factor in voluntary overtime, following a tribunal ruling last year.
For workers on fixed-hour contracts, this may happen on a regular basis, particularly during busy periods, so it’s essential that businesses are aware of this when calculating holiday pay.
For help on matters relating to employment law and advice on how the new holiday rules could impact on your construction or engineering business, please contact us.