Do zero hours workers need holiday pay?
Yes!
All employees earn holiday pay. It is also important to remember that part time employees cannot be discriminated against, which means that you cannot give them less holiday (pro rata) than full time workers.
The reason for this is that the majority of zero hours or casual workers (who are all deemed to be part time workers) are either female, carers, young or non-British workers. All of which are protected characteristics.
A full-time employee’s statutory minimum holiday entitlement in any year is 28 days which can include bank holidays.
The normal bank holiday entitlement is eight days a year.
A zero hours employee or casual worker is entitled to a pro rata entitlement of the full time holiday, based on the number of hours they have worked in that week/month/year.
If, for example, they worked an average of 20 hours a week over the year, then they would be entitled to 14 days holiday in the year. Holiday is “paid time off”.
There is an advantage to zero hours workers though – you can pay out the holiday entitlement monthly without “losing” their normal working hours for you. They are simply deemed to be on holiday during the hours they are not working for you.
To calculate the holiday pay for zero hours or casual workers, you have to calculate it using average hours worked over 52 weeks, rather than, as it was previously, 12 weeks or even worse, multiplying working hours by 12.07%.
Weeks are not included in the calculation if they are:
- annual leave
- sickness absence
- nil earnings, or
- statutory payments such as paternity pay.
If zero hours or casual workers have been with you for longer than 52 weeks, but there are weeks with nil earnings, you are expected to go back up to a maximum of 104 weeks to find your 52 weeks of pay reference period.
For new zero hours employees or casual workers who haven’t worked 52 weeks, you should base your holiday pay calculations on the number of pay weeks that are available.
Collect the data on a weekly basis and make sure you are recording all overtime worked (it also must be included in this calculation).
