Holiday Pay Reference Period

As you will have seen in our January newsletter, as part of the Good Work Plan, coming into effect on 6 April 2020, the holiday pay reference period used for determining a week’s pay is increasing from 12 weeks to 52 weeks. But, in practice, what does this mean and how will it work?

It means that when calculating holiday pay for staff that don’t have “fixed” or “normal” working hours (i.e. casual workers or employees) you will need to take into account the last 52 weeks worked as opposed to only the last 12.

The idea is that the extension to the reference period will allow greater flexibility for seasonal workers or atypical roles; aiming to ensure they are treated equally and fairly. For example, if a flower arranger’s holiday is calculated in January, they may have worked a lot of overtime in the last 12 weeks over the festive period. If their holiday is calculated in July, they may have worked much lower hours in the past 12 weeks. They could therefore be disadvantaged when choosing to take holiday at a quieter time of the year when their weekly pay might be lower. The extension to the reference period aims to eradicate this.

Importantly, the new reference period will work in very much the same way to the current 12 week period but, in case you need a reminder on this, below is the further detail:

  • You will need to look back across the last 52 weeks actually worked by the staff member (this means that weeks in which no pay was received will be excluded);
  • If that staff member has worked less than 52 weeks, then you will need to include as many whole weeks of pay as are available;
  • Paid overtime during that reference period (be it 52 weeks or shorter) must be included in the calculation.

You will need to make sure that those responsible for calculating holiday payments within your organisation are aware of the new requirements and how they apply.

Please note, this extension to the reference period does not consider the issue of how you should calculate accrued holiday pay for those who don’t work for large parts of the year (currently being considered in the case of The Harpur Trust v Brazel) which was covered by Louis Howlett in our November 2019 newsletter.

Laura Kelleher, Solicitor 

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