12 Apr 2024

West Midlands firms not ready for Employee Rights Regulations - expert

David McCormack HIVE360 3.jpg

Small and mid-size recruitment agencies businesses across the West Midlands are unprepared for the changes affecting how they calculate holiday pay for their irregular and part-year workers under the Holiday Pay Reforms that are now in force and form part of the new Employee Rights Regulations.

This is according to compliance and payroll experts at Birmingham-based employment solutions specialists HIVE360, which has been working with recruiters as well as private companies to help them navigate and understand the Regulations since they came into force on January 1 this year.

The company estimates that whilst awareness of the new Regulations is pretty widespread, around half of recruiters and businesses don’t know the Holiday Pay Reform forms part of the wider Regulations.

A recent survey conducted by HIVE360 to establish the level of awareness and views of the new Regulations, found that more than half (55 per cent) of businesses taking part are unaware of the Employee Rights Regulations.

HIVE360’s CEO, David McCormack (pictured), says: “Whilst the larger recruitment agencies have already made changes to systems and software and in many cases, trained staff about the new regulations, the small and mid-sized recruitment businesses are lagging far behind, and worryingly have been simply ambling along towards the 1 April deadline, not realising the implications the Holiday Pay Reforms now have on their contracts and annual leave year periods.

“Anecdotally, most clients are aware of the changes but not necessarily the detail of them.

“Most of those our team has spoken to about the new regulations are not looking to change to rolled up holiday pay for several reasons; the biggest one being that it creates more work to try and ensure workers do still take leave, as most won’t if they know they aren’t ‘being paid’ for it, so they’re choosing to stick with the more traditional method of accrual and holiday pay.

“Their objective is to create more straightforward rules for employers managing irregular and part-year workers by removing confusion and preventing over and under payments in comparison to full time or fixed hour workers.

“For most employers, and workers, the new regulations are a welcome change and long overdue, bringing clarity and transparency to an area of employment law that was shrouded in grey thanks to the Harpur Trust case of 2022. For others it may seem like an administrative nightmare, but what cannot be disputed is that change was needed and has now finally been delivered.”

One of the biggest shake ups means that ‘rolled-up’ holiday pay for these workers will now be allowed and recognised – a 12.07 per cent uplift to regular pay in each pay period.

“For irregular hours and part year workers, holiday will accrue at 12.07 per cent of hours worked each pay period, capped at 28 days” added McCormack.

“Holiday pay will be based on average weekly earnings, ignoring unpaid weeks.”

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