Holiday pay has been the subject of many employment tribunals in recent years and as a result of much lobbying (and the Matthew Taylor review), the reference period for calculating holiday pay is to be extended from 12 weeks to 52 weeks – the aim to provide a more accurate reflection of average pay for the purposes of holiday pay.
The employment rights (employment particulars and paid annual leave) (amendment) regulations 2018 will bring this change into force from 6 April 2020.
A couple of points:
Where the employee has been in employment for fewer than 52 weeks, the reference period will be the number of weeks that the employee has been employed.
Working back over the 52 weeks, where a week saw no payment because the employee did not work, the preceding week of work and pay should be used. Once the 52-week reference period comes in to force, the maximum period that the employer should go back will be 104 weeks, before the beginning of the period of leave.
If you are one of our Clients, we will be looking at incorporating this change for you.
You can read more about this are in our earlier article: Holiday Pay | it can be tricky for some and the rules are changing