🎯 For admins. Planday's product team is prioritising updates to comply with new holiday legislation. This is a high priority for Planday and we will keep you updated with an expected release date. Meanwhile, consider taking optional steps outlined here for smoother transition to the new calculation method.

On 1 January 2024, the UK government introduced a new Holiday entitlement reform for irregular and part-year workers that came into effect on 1 April 2024. For businesses starting their holiday year before 1 April 2024, holiday entitlement calculations for irregular hours and part-year workers should remain unchanged in 2024 and the new legislation would only apply from the next holiday year. In such cases, you can continue to use the calendar week method or a percentage method based on hours worked until the next holiday year start date. Businesses starting their holiday year on or after 1 April, 2024 should adopt the new legislation by the start of the holiday year.

You and your employees are always advised to check for exact leave account balances. We encourage you to perform regular reviews and audits of leave accruals and balances to ensure your business is meeting your obligations as an employer with respect to your employees’ entitlements. If you are unsure of what leave employment terms are correct for your business or your employees, we encourage you to visit gov.uk or seek legal advice.

What are the changes?

For holiday years starting on or after the 01 April 2024, the correct method to calculate holiday entitlement for workers who only work part of the year or irregular hours (including zero-hour workers) is that holiday will be calculated in hours rather than weeks, and will accrue on the last day of each pay period, at the rate of 12.07% of the actual hours worked in that pay period, rounded to the nearest whole number of hours.

Employers have two options for how they would like to pay out irregular-hours / part-year workers for their annual leave entitlement.

	Description	Supported or not
Option 1: 12.07% accrual	Employees will accrue 12.07% of their worked hours at the end of every pay period, rounded to the nearest whole number of hours at the end of each pay period. Employees will be paid for their leave as they take it and leave pay will be calculated accordingly.	Not supported in Planday yet.
Option 2: Rolled-up leave	Employees will also accrue 12.07% of their worked hours and employers can simply pay their employees an extra 12.07% for all work carried out, which would just be paid alongside pay for that work in the pay run for each pay period. Employees are still entitled to leave but would not be paid when they take leave in an ad hoc manner, as they are already being paid out continuously.	This holiday entitlement accrual method isn't fully supported yet.

For option 2 - Rolled-up leave, check the steps below to prepare for the change and approximate balances until the full release. We advise configuring the payout in your payroll system for accurate calculations based on total payment in each pay period.

Prepare for the transition

If you wish to prepare for the transition and you want to use rolled up leave, you can follow these steps:

1. Retire your old Policies

Go to Settings > Leave & Overtime > Policies edit the relevant policies and do the following:

Turn off automatic renewal if it’s enabled
Turn off automatic account creation if it’s enabled
Optionally, rename the policy to indicate that it’s retired

2. Deal with existing accounts

You'll need to delete the leave accounts that were auto-created for the upcoming year if you had the option "Renew automatically" enabled.
- Go to Schedule > Leave accounts > adjust the Period filter. In the account row, select the delete icon on the far right.

Note: You must first deny all pending and approved requests before deleting the accounts.

3. Create a new policy to prepare for the change

Note: This is a temporary workaround that will help you prepare your setup for the release.

If you’re choosing to calculate holiday based on rolled up leave, you can do the following:

Set up holiday pay in your payroll system as rolled-up leave needs to be determined based on the employee’s total leave in the pay period and your payroll system is the best place to do that. Besides, the payout is not influenced by leave requests or shifts tracked in Planday.
You can create a policy with the 12.07% accrual method, set up in hours and with no monetary payout.
- to do so, go to Settings >Leave & Overtime > Policies > Create policy > Create a custom policy > Leave policy.

This will give you a good approximation of an employee’s leave balance until Planday is fully ready with the correct accrual type, at which point you’ll be able to change the policy in order to recalculate balances.

Then, you’ll need to create accounts for your employees with the new policy.

You can follow the General steps: Transitioning from one type of holiday account to another to help you with this process.

Note: If you’re planning to use the new 12.07% accrual and pay method instead of Rolled up leave, you can still follow the step above to prepare a new policy. This policy will approximate leave balances and once we release a solution supporting the new legislation you will be able to update the policy to start calculating precise balances and leave pay according to the leave reform. Until then, we recommend to handle leave pay manually as current functionality would only approximate the pay data.

FAQs

When will I need to make the change?

The new changes come into effect for any holiday years starting on or after 1st April 2024.
For holiday years starting prior to 1st April 2024, the new changes will come into effect in the next holiday year starting after this date.

For example if the holiday year for the business started e.g. in January 2024, the changes don’t affect the business until January 2025.

How will I be supported with the change?

Our help-centre articles will be updated, and we will continue to inform you in a timely manner on how to transition to the new setup.

My holiday year starts before 1 April 2024. Can I still use the Calendar Week method?

Yes, you can. For businesses starting their holiday year before 1 April 2024, holiday entitlement calculations for irregular hours and part-year workers should remain unchanged in 2024 and the new legislation would only apply from the next holiday year. In such cases, you can continue to use the calendar week method or a percentage method based on hours worked until the next holiday year start date. Businesses starting their holiday year on or after 1 April, 2024 should adopt the new legislation by the start of the holiday year.

See related articles:

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