HOT TOPIC
a level of ambiguity is sometimes necessary. I can’t give you a ‘to the hour’ definition of what this means. Doing so would allow employers to manipulate contracts and working practices to reach an outcome beneficial to only themselves, rather than striking the balance that employment rights seek to enforce. Whether your particular case falls within this definition will depend on your contract wording. At the end of the day, you need to ensure you’re comfortable with your approach and that you can defend it at tribunal (although we certainly hope it doesn’t come to that). A zero-hour contract would likely fall under this definition. However, we would warn that if regular hours are worked and paid on a regular enough basis, this could form enough of a case for the worker to no longer be treated as an IH worker. Moving onto PY workers, initially, this seems like a straightforward (if a bit wordy) description. There are still a couple of things to note that could impact which workers this applies to. First, and this may be obvious, but the week in which they aren’t required to work as part of the contract doesn’t include periods of forced holiday. Therefore, if workers are told where to take some elements of their entitlement (such as over the Christmas period or a factory shutdown), they wouldn’t be considered a PY worker. If, instead, those closedown periods were enforced under the contract, but the employee wouldn’t be paid or be allowed to take leave, then the definition would be satisfied. The minimum period of no work or pay to comply with this rule is one week. In my opinion, this is a rather short time frame, but this is to align with the shortest reporting period for real time information (RTI). The second thing to consider relates to teachers or those who work during term times. This group is of particular note, as it was the case of a music teacher (Brazel) that, in a way, prompted the government to act and change the way holiday pay and entitlement is calculated. Where an individual works term time and is paid as and when they work, then of course, they will fulfil the description. However, if they work term time but are paid a salary spread across the 12 calendar months of the year, for example, then we don’t believe this is enough to classify them as a PY worker. Therefore, for such workers, you would be required to operate the usual
52-week reference period for holiday pay calculations. Well, we haven’t even got to the changes yet, just who they apply to. “These changes come into effect from 6 April 2024, like everything else, right? Hold your horses, the new calculations will impact leave years starting on or after 1 April 2024” Roll-up vs build an entitlement Who the rules apply to isn’t up to you, unless you’re structuring contracts in very specific ways, but now we come to an area where you do have a choice. You can use the 12.07% calculation to provide workers with a pot of annual leave to take. This simplifies the entitlement calculation and leaves you with the standard 52-week calculation for the pay element. Or you can instead roll-up holiday pay, calculating 12.07% of pay and paying it each pay period. The complexity here comes not from the calculation when someone is working, but mainly from the calculation when they’re not. As we should already know, entitlement to accrue holiday doesn’t stop when someone is on statutory leave, such as sick or maternity leave. If you choose to roll-up holiday pay you: l take the 12.07% holiday pay element from the previous 52 weeks (which should be shown as a separate line on payslips) l work out an average weekly amount l multiply that by the number of weeks sickness or statutory leave. Fairly simple. However, if you choose to accrue a pot of leave for employees, in such a situation you would need to: l find the hours worked in the previous 52 weeks l discount weeks in which the worker was on sick or statutory leave l include all other weeks, even if no work was done in those weeks l if weeks are discounted, go back
additional weeks, up to a maximum of 104 weeks l calculate 12.07% of the total hours to get a weekly number of hours l multiply the number of hours by the number of weeks relating to sickness or statutory leave. As you can see, one of these required a three-bullet point explanation and the other needed double that, so six bullet points, to explain. Within those six bullets points is the requirement to capture weekly hours data (something not every employer does), which was one of the biggest sticking points of the initial consultation in changing how we calculate for these workers. Which one is simpler? Well, surprisingly, when we polled members and attendees on CIPP webinars, there were still many employers confirming they wish to accrue the leave. This is entirely up to the administering employer but ensure you’re making an informed decision. When? These changes come into effect from 6 April 2024, like everything else, right? Hold your horses, the new calculations will impact leave years starting on or after 1 April 2024. If 1 April is the start of your leave year, then great, but if you (like I assume many will be) start your leave year on 1 January, then you will need to wait until 1 January 2025 to implement these changes. In my opinion, this just gives you time to see how other companies adapt and manage before making the changes yourself. If you’re really keen to change processes, you have the option of contractually changing your leave year, but this is a lot of work for what should equate to little or no benefit. However, I’ll leave that up to you. You will hopefully read my words like waves of water gently lapping at the beach, smoothing over the sands of the messy past of holiday pay and entitlement. In my opinion, a lovely metaphor, if a little cheesy, for the certainty these new rules will bring. That isn’t to say it will be perfect right away, as we need time to become accustomed to the new rules and find the best way to navigate them. But it’s certainly a lot clearer than it has been in the past few years while we were waiting in the legal limbo brought about by the Harpur Trust v Brazel case. Whether you’re a fan of the new rules or wanted something even simpler still, at least we have something to work with to ensure compliance going forward. Good luck! n
57
| Professional in Payroll, Pensions and Reward |
Issue 98 | March 2024
Made with FlippingBook - Online magazine maker