Calculating holiday pay if using the 52 week reference period
02 September 2019
From April 2020 the holiday pay reference period will be extended from 12 to 52 weeks. Guidance has not yet been published but questions are being raised about how this will work in practice.
The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 bring into force from April 2020 (in Great Britain) a change to help ensure that those workers in seasonal or atypical roles get the paid time off they are entitled to.
Where a worker has been employed by their employer for at least 52 weeks, the reference period is increased from 12 weeks to 52 weeks. Where a worker has been employed by their employer for less than 52 weeks, the reference period is the number of weeks for which the worker has been employed.
How will this actually work? Will it be a straightforward year regardless of how many weeks in that year the worker has actually been paid? Or will we have to keep going back through the weeks that include pay to reach 52 weeks?
We asked the Department for Business, Energy and Industrial Strategy (BEIS) who said that their plan is that the 52 week reference period will work much the same way as the 12 week reference period. Employers would have to count back over the last 52 weeks that a worker worked and received pay. Weeks that a worker did not work or receive pay would be excluded. If there are fewer than 52 weeks’ worth of pay information, then the employer would have to include as many whole weeks of pay information as are available.
We would like to add to the response from BEIS, in that the Regulations state that there is a 104 week cap. So, it will not be necessary to go back any further than 104 weeks to find relevant weeks of pay, you would just use the number of weeks worked within that 104 week period, even if it is less than 52. No account needs to be taken of weeks preceding the 104 weeks before the beginning of the period of leave.
We will of course publish guidance through our News pages as soon as it becomes available.