From April 2020, the holiday pay reference period will be lengthened from 12 to 52 weeks.
The new regulations, which take effect from April 2020, will ensure anyone in seasonal work or with abnormal working hours receives the paid holiday to which they are entitled.
The current Pay reference period only looks back at successful weeks of earnings up to a maximum of 12, however, if there are weeks of annual leave, statutory payments or nil earnings, these weeks are disregarded and the employer has to count backwards until they have what is referred to as 12 successful weeks of earnings.
The Department for Business, Energy and Industrial Strategy (BEIS) have said that their plan is that the 52-week reference period will work in much the same way as the 12-week reference period. Employers would have to count back over the last 52 weeks that a person worked and received pay. Any weeks that a worker did not work or receive pay will 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.
This does of course raise questions in relation to crossing over tax years, and whether payroll software is set-up to calculate from one year to the next.
Further guidance from BEIS is awaited.
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