A new survey highlights widespread inaction from employers regarding holiday pay reforms.
- More than two-thirds of employers have not adjusted their holiday pay policies post-reform.
- The reforms mainly impact workers on ‘irregular hours’ or working ‘part-year’ schedules.
- Many employers remain uncertain about which staff these changes affect.
- Ambiguity in new worker categories creates risk of legal issues for employers.
A recent survey by an employment law consultancy indicates that over two-thirds of employers have not taken necessary actions in response to recent holiday pay reforms. Despite the reforms being in effect for over a month, confusion remains prevalent among businesses regarding their obligations.
The changes to the Working Time Regulations significantly impact employees working ‘irregular hours’ or on a ‘part-year’ basis, a substantial segment of the workforce in the UK. However, many organisations are uncertain if these new rules apply to their employees, with four in ten employers unsure of the regulations’ relevance to their workers.
Further compounding the issue, nearly a quarter of businesses have decided against amending their policies, either due to uncertainty or unwillingness to change. This lack of action stems from a broader trend of legislative updates introduced in 2024, including revised flexible working rights which, along with holiday pay reforms, are the most pressing concerns for employers.
Key challenges include a need for clearer definitions of ‘irregular hours’ and ‘part-year’ workers. Current guidelines have been criticised for their lack of clarity, creating difficulties in categorising workers correctly and leading to potential legal pitfalls.
Principal Employment Law Solicitor at a law consultancy firm, Lesley Rennie, expressed concern over the uncertainty these reforms have introduced. Rennie highlighted the complexities surrounding the definitions of new worker categories, noting that terms such as ‘irregular hours’ are inadequately defined, leading to confusion and possible misapplication.
The implication of misclassifying workers is significant, with risks of breach of contract, unlawful wage deductions, and constructive dismissal claims. Despite the challenges, businesses are encouraged to conduct audits to determine if they have employees who might be classified under the new worker categories.
Employers are advised to seek legal counsel if unsure how to proceed with implementing changes. Rennie points out that even if an organisation’s holiday year commenced after the reforms, it remains crucial to address these changes to avoid non-compliance.
Employers must seek clarity and expert advice to ensure compliance and avoid legal complications related to holiday pay reforms.
