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April 1st 2024, Release Note: WFM UK | UK HR & Payroll: Casual Holiday for Part-Year and Irregular Workers

Fourth Customer Success Portal
  • Updated
Casual Holiday for Part-Year and Irregular Workers

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.

Finger01.png 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

Finger01.png 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.

Finger01.png 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 employment type, rather than from the holiday year start date.

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.5 - 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.6 - Employee rota Week 1 (01/04/2024 to 07/04/2024)


Fig.7 - Employee rota Week 2 (08/04/2024 to 14/04/2024)


Fig.8 - 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.9 - 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.10 - 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.11 - 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 Overtime, 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.12 - Payment Type Configuration

Finger01.png 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.13 - Employee Additional Holiday Pay screen

Payment of Additional holiday Pay can be found in the employee's payroll summary:


Fig.14 - 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.15 - Additional holiday Pay Global Settings

 

Rolled-Up Holiday Pay

Rolled-Up Holiday Pay Global Setting

Finger01.png 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.16 - Rolled Up holiday Pay Global Setting

The following warning message will then be displayed:

Fig.17 - 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.

Finger01.png Please note: Rolled-up holiday can only be used for holiday tears 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.18 - 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.

For example, upon submission of three rota weeks to payroll the accrual calculation of total hours worked multiplied by 12.07% gives the amount of casual holiday to pay in hours. Casual holiday is then paid out at accrual multiplied by the employee's hourly rate. Then finally the Additional holiday pay is calculated and added to payroll:

Fig.19 - 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.

New Terms/Acronyms

  • 'Casual Employee' - term used for part-year workers or irregular workers

Additional Resources

 

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