| Casual Holiday for Part-Year and Irregular Workers |
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New casual holiday functionality and calculations for part-year and irregular workers ahead of the legislation changes, effective from the start of the holiday year, on or after April 1st, 2024 |
Release date: April 1st 2024
- Enabled by default? - Yes
- Set up by customer admin? - Yes
- Enable via support ticket? - No
- Affects configuration or data? - Yes, holiday accrual and pay for casual holiday are different to flexible and full-time/part-time
What's Changing?
Introduction of the new casual holiday functionality and calculations for part-year or irregular workers.
In this release note, part-year or irregular workers are described as 'casual employees'.
Reason for the Change
With the introduction of The Employment Rights (Amendment, Revocation, and Transitional Provision) Regulations 2023 there is a requirement to be able to set an employee's employment type as 'Casual', enabling the use of the new holiday calculations for accrual and pay, as well as the ability to use rolled-up holiday pay for casual employees.
Customers Affected
All customers using the HR and Rota modules as well as the Payroll module when concerning holiday pay.
Release Note Info/Steps
- Casual Holiday Accrual Calculation
- Global Settings Relating to Casual Holiday
- Casual Holiday
- Rolled-Up Holiday Pay
Casual holiday Accrual Calculation
Please Note: Casual holiday is only accrued, taken and paid in hours, not days.
From holiday Years starting on or after the 1st of April 2024 (see Additional Information), employers will be able to, lawfully, calculate annual leave entitlement as 12.07% of hours worked in a pay period.
With respect to UK HR & Payroll, this is done via rota submission. If a rota is submitted for an employee who has worked 37 hours, the casual holiday accrual calculated is as follows (noting that if the holiday accrual is calculated to a fraction of an hour, rounding rules do apply):
- Round the fraction down to the nearest hour if it is less than 30 minutes (.49 or lower)
- Round the fraction up to the nearest hour if it is 30 minutes or more (.50 or higher)
37 (hours) x 12.07% = 4.46, rounded to 4 Hours
Holiday accrued = 4 Hours
If an employee has a period of absence or statutory leave (for example maternity leave) during a rota week, then they will still accrue holiday as a casual employee. This is done by calculating an average hours per week, based on the last 52 worked weeks, going back to a maximum of 104 weeks. In the below example, the employee has worked 1664 hours in the last 52 worked weeks:
1664 (Hours Worked) ÷ 52 (Worked Weeks) = 32 Average Hours Per Week
32 (Average Hours Per Week) x 12.07% = 3.8624, rounded to 4 Hours
Holiday accrued for week where absent or on statutory leave = 4 Hours
If an employee has not worked for their employer for at least 52 weeks then it will use the maximum number of worked weeks possible. For example, if the employee has only worked for the employer for 26 weeks then it will use 26 weeks as the maximum. In the below example, the employee has worked 728 hours in the last 26 worked weeks:
728 (Hours Worked) ÷ 26 (Worked Weeks) = 28 Average Hours Per Week
28 (Average Hours Per Week) x 12.07% = 3.3796, rounded to 3 Hours
Holiday accrued for week where absent or on statutory leave = 3 Hours
Global Settings Relating to Casual Holiday
Enable Casual Employment Type
Once the Enable Casual Employment Type global setting is ticked (and saved), an employee's employment type can then be set as casual. This means their holiday will be calculated using the casual holiday calculations.
Please note: It must be stated that the use of casual holiday calculations before the introduction of the new legislation is deemed unlawful.
The new casual holiday legislation and the changes made to UK HR & Payroll are only effective from the start of the new holiday year on or after the 1st of April 2024 (see Additional Information). This means that if an employee is changed to casual before the holiday year start date then the holiday accrual will only be based on hours actually worked, multiplied by 12.07% and not inclusive of weeks where they were off sick or on statutory leave. Whereas if the employee is casual from the holiday year start date, it will include weeks they were off sick or on statutory leave.
To enable the user for the Casual employment type, apply the global setting:
- Go to HR > Administration > Global Settings > Edit Default holiday Settings > Holiday Calculations
- Tick Enable Casual Employment Type and then Save
Fig.1 - Enabling the Casual Employment Type Global Setting
To set an employee as 'casual' employment type:
- Go to: HR (or Payroll) > Employees > Employee List > Find and Enter Employee Record > Employee Info > Employment Details
- Select Casual and then Save
Fig.2 - Setting Casual Employment Type
The following warning message will then be displayed:
Fig.3 - Employment type change to casual, warning message
Due to the nature of the casual holiday calculation and how it differs from holiday calculations for flexible, full or part-time employees, users will be prompted to ensure all remaining holidays are scheduled, as existing holiday allowances will be reset to zero upon hitting the effective date of the employment type change to casual. The very same can be said for employees moving from casual to flexible or full/part-time.
Casual Holiday Reset
Another global setting linked with the casual holiday functionality is Reset Casual Holiday Allowances Annually. This is to ensure casual holiday accrual is reset at the start of each holiday year. If this is not enabled then any casual holiday allowance will be automatically carried into the next tax year.
To enable/disable this global setting:
- Go to HR > Administration > Global Settings > Edit Default holiday Settings > Holiday Calculations
- Tick Reset Casual holiday Allowances Annually and then Save
Fig.4 - Casual holiday reset - global setting
Casual to Other Employment Types
Another global setting now available is Calculate holiday accrual from change date. This setting relates to changing employees' employment type from 'Casual' to either 'Flexible', 'Full Time' or 'Part Time'. The setting allows for holiday accrual to calculate from the date the employee changed to 'Flexible', 'Full Time' or 'Part Time', rather than from the holiday year start date.
Please note: When changing an employee from, or to, the Casual employment type the system will provide a warning to users informing them to settle any remaining holidays for the employee prior to becoming or before moving away from the Casual employment type. Prior Holiday information will not be retained.
Fig.5 - Changing from or to Casual System Warning
Example Calculation
With the global setting enabled, an employee's holiday year start is 01/04/2024 and they change from 'Casual' to 'Full Time' on 01/12/2024 with a total allowance of 28 days. They can accrue 10 days from 01/12/2024 to 01/04/2025 (start of the new holiday year). The employee's accrual on 01/01/2025 (hypothetically today's date) is calculated:
10 (Total days that can be accrued) ÷ 121 (Days between 01/12/24 and 01/04/25) = 0.083
0.083 x 31 (Days between Employment Type Change and Todays Date = 2.5 Days (Rounded)
Days Accrued = 2.5 days
If the global setting was not enabled, the calculation would go back all the way to the start of the holiday year:
10 (Total days that can be accrued) ÷ 365 (Days between 01/04/24 and 01/04/2025) = 0.027
0.027 x 275 (Days between holiday Year Start and Todays Date = 7.5 Days (Rounded)
Days Accrued = 7.5 days
To enable this global setting go to:
- HR > Administration > Global Settings > Edit Default holiday Settings > Holiday Calculations
- Tick Calculate holiday accrual from change date and then Save
Fig.6 - Calculate holiday accrual from change date - global Setting
Casual holiday
Casual holiday Accrual
Holiday accrual for employees on the 'Casual' employment type is based on the hours approved and submitted on the rota week. For example, this employee in the three weeks of the holiday year has worked 120 hours:
Fig.7 - Employee rota Week 1 (01/04/2024 to 07/04/2024)
Fig.8 - Employee rota Week 2 (08/04/2024 to 14/04/2024)
Fig.9 - Employee rota Week 2 (15/04/2024 to 21/04/2024)
With these rotas submitted, the calculation is as follows:
40 (Hours in Week 1) x 12.07% = 4.828, rounded to 5 hours
holiday hours accrued = 5 Hours
40 (Hours in Week 2) x 12.07% = 4.828, rounded to 5 hours
holiday hours accrued = 5 Hours
40 (Hours in Week 3) x 12.07% = 4.828, rounded to 5 hours
holiday hours accrued = 5 Hours
Total holiday hours accrued (Week 1 + 2 + 3) = 15 Hours
Fig.10 - Employee holiday Screen - Hours Accrued
When holiday is booked for or by an employee, the normal process resumes in booking holiday and the hours taken will reduce the 'Hours Remaining' as expected:
Fig.11 - Employee holiday Screen - holiday Taken
Casual holiday Pay
Casual holiday is paid at the employee's hourly rate. As expected, once the holiday has been booked and rota submitted in which that holiday features, it will feed through to payroll to pay:
Fig.12 - Employee Payroll Summary - holiday Paid
Casual Holiday Pay - Additional Holiday Pay
Whilst casual employees have their holiday paid at their hourly rate, they are entitled to additional holiday pay. Outside of their hours paid, casual employees are entitled to have payments such as Commissions and Length of Service Awards.
In UK HR & Payroll, payment types can be flagged as Include in holiday Pay to be included in the Additional holiday Pay calculation. To find this:
- Go to Payroll > Administration > Payment Types > select Payment Type
- Tick Include in Holiday Pay and then Save
Fig.13 - Payment Type Configuration
Please Note: 'Hours' payment types should not be flagged, as these are already included in the normal holiday pay calculation. The decision on which payments should be included is up to the employer, however it is recommended that the legal advice is considered.
Calculation of the additional holiday pay for casual employees is based on the total amount of pay (on payments with Include in holiday Pay ticked) divided by the total number of hours worked, all within the last 52 worked weeks (going back a maximum of 104 weeks). This figure is then multiplied by the number of holiday hours in the period and paid as additional holiday pay.
For example:
£5200 (Total number of payments with 'include in holiday' ticked) ÷ 1560 (total number of hours) = £3.33
8 (number of holiday hours to pay for) x £3.33 = £26.64
Additional holiday pay paid = £26.64
The calculation in the system can be found by going to:
- Payroll > Employees > Employee List >search for and select Employee Record > Employee Info > Holidays > Additional Holiday Pay
Fig.14 - Employee Additional Holiday Pay screen
Payment of Additional holiday Pay can be found in the employee's payroll summary:
Fig.15 - Employee Additional holiday Pay paying in Payroll Summary
Global settings around additional holiday Pay can be found by going to:
- HR > Administration > Global Settings > Edit Default Holiday Settings > Holiday Calculations
Fig.16 - Additional holiday Pay Global Settings
Rolled-Up Holiday Pay
Rolled-Up Holiday Pay Global Setting
Please note: The Rolled-Up Holiday global setting applies to the entire portal. If enabled, every casual employee in the portal will be using rolled-up holiday pay.
To enable Rolled-Up Holiday Pay:
- Go to HR > Administration > Global Settings > Edit Default holiday Settings > Holiday Calculations
- Tick Enable Rolled Up Holiday Pay for Casual Employees and then Save
Fig.17 - Rolled Up holiday Pay Global Setting
The following warning message will then be displayed:
Fig.18 - Rolled Up Holiday Pay Global Setting - Warning Message
As the warning states, when rolled-up holiday is enabled the accrual for any casual employee will reset to zero. So, before enabling it is important to ensure all previously accrued holiday is paid out. This ensures the employee does not miss out on any accrued holiday.
Please note: Rolled-up holiday can only be used for holiday year starting on or after 1st April 2024.
No Longer Able to Book Holiday
Once rolled -up holiday is enabled, users will not be able to book holiday for casual employees, as the Create A holiday Request button is no longer available:
Fig.19 - Holiday Screen where Rolled Up holiday is Enabled, with no ability to book holiday
Rolled-Up Holiday Pay
The calculation of casual holiday accrual, casual holiday pay and casual holiday additional holiday pay is the same when rolled-up holiday pay is being used. The only difference is that when using rolled-up holiday pay, holiday accrual for that pay period is immediately calculated and paid out upon the submission of the rota, without the rounding of the hours accrued.
For example, when three rota weeks are submitted to payroll (see Fig.7–9), the accrual is calculated by multiplying the total hours worked by 12.07%. This determines the amount of casual holiday pay in hours, which remains unrounded (unlike in cases where rolled-up holiday pay is not used and rounding is applied). The casual holiday pay is then calculated by multiplying the accrued hours by the employee’s hourly rate.
40 (Hours in Week 1) x 12.07% = 4.828, unrounded
holiday hours accrued = 4.828 Hours
4.828 * £15.00 (Hourly Rate) = £72.42 total Rolled Up Holiday Pay
40 (Hours in Week 2) x 12.07% = 4.828, unrounded
holiday hours accrued = 4.828 Hours
4.828 * £15.00 (Hourly Rate) = £72.42 total Rolled Up Holiday Pay
32 (Hours in Week 3) x 12.07% = 3.8624, unrounded
holiday hours accrued = 3.8624 Hours
3.8624 * £15.00 (Hourly Rate) = £57.94 total Rolled Up Holiday Pay
Total Rolled Up Holiday Pay = £202.78
Finally, if applicable, additional holiday pay is calculated and added to payroll too.
Fig.20 - Employee Payroll - Hours worked with Rolled-Up holiday Pay and Additional holiday Pay
Additional Information
- If the employer's holiday year start date is, for example, 1st March 2024 then the new Casual Holiday Legislation would not apply to this employer until 1st March 2025 as this is the first holiday year start date on or after the 1st April 2024
- Only full weeks are included in the casual holiday accrual calculation, but using the end date of the rota. If the holiday year start is 01/04/2024, then this means in the event of a rota week crossing over the holiday year-end and start, if the rota week is 31/03/2024 to 06/04/2024, then the hours worked on 31/03/2024 will be included in the accrual calculation for the new holiday year. This ensures the employee always has the opportunity to take accrued holiday at the end of a holiday year
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The Fourth calculation and the calculation defined in legislation differ in format but produce the same result. A comparison of the Rolled-Up Holiday Pay calculation versus the government-defined method is shown below:
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Legislation:
- 40 Hours Worked * £15.00 hourly rate = £600.00
- £600.00 * 12.07% = £72.42
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Fourth:
- 40 Hours Worked * 12.07% = 4.828 Hours Accrued
- 4.828 * £15.00 hourly rate = £72.42
- In Fourth, the accrued hours are displayed and immediately paid out as rolled-up holiday pay. This approach provides full visibility of what the holiday accrual would have been, while ensuring the payment is made at the same time as regular wages
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Legislation:
New Terms/Acronyms
- 'Casual Employee' - term used for part-year workers or irregular workers
Additional Resources
- WFM UK | UK HR: Holiday for Irregular Hour and Part-Year Workers
- Published Legislation - Holiday pay and entitlement reforms from 1 January 2024
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