In our weekly legal column, the Leader, with the expert advice of the team at GHP Legal, sets out to answer some of your problems. Today's question is answered by Partner Robert Williams...

How do I calculate holiday pay under new rules from April 1, 2024?

Q: I run a small business with two full-time and four part-time employees. I have heard about the new holiday pay laws, but am not sure what to do about implementing them as they kick in on April 1 and our holiday year runs January-December. Please could you explain?

A: The new holiday legislation only applies to part-time and "irregular hours" employees. Part-time means employees who do not work and are not paid for at least one week per year; irregular hours employees are those who work different hours in each pay period. The legislation's main advantage is that it sets out a fixed formula for calculating holidays for such workers.

If your business holiday year runs January to December, you should implement the new rules from January 1, 2025. Under the new rules you may either pay these types of workers holiday pay or a payment on top of their pay instead of holiday. This rolled up holiday pay means paying eligible employees a pay uplift to cover the holiday pay they have earned in that pay period. The calculation is 12.07% of their pay for that pay period and will be shown as a separate item on their payslip. If they wish to take additional time off as holiday they will be able to but this will be unpaid.

Key to explaining this is the difference between holiday entitlement and holiday pay. Holiday entitlement is the number of hours/days' holiday entitlement an employee is entitled to during the holiday year; the statutory minimum holiday year entitlement being 5.6 weeks. This is then calculated against the proportion of full-time hours the employee works. Holiday pay is the rate of pay that an employee is paid when they take holiday entitlement. Holiday pay should reflect the regular sums employees receive if they were working, including overtime.

These changes are subject to existing employment contracts, so do check to ensure the changes are allowed under your existing contracts.

• This question has been answered by Robert Williams, a Partner with GHP Legal. If you would like to speak to someone about this or any other legal matter, please visit our website and use the contact us form, or call us on: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194.