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If your workers’ and employees’ pay varies (perhaps due to commission, overtime or something else) new laws from 01 January 2024 will affect your organisation. Here’s what you need to know.

First four weeks’ holiday pay – from 01 January 2024, holiday pay for the first four weeks of holiday taken by workers and employees with variable pay must be calculated to include overtime, commission, and payments for length of service, seniority or professional qualifications. 

Remaining holiday pay – any holiday pay in excess of four weeks will not legally need to include the variable elements of pay (such as commission and overtime). Of course, you can choose to include variable elements for all holiday pay calculations if you want to avoid the admin burden of splitting it out.

Case law – tribunal decisions already meant that holiday pay should be calculated in accordance with what this new law requires, but this is the first time we’ve seen it set out in legislation. Many employers have, until now, taken a view as to whether to calculate holiday pay in this way.

Penalties – those who ignore the law from 01 January 2024 can expect potential claims for unlawful deductions from wages. These claims can go back as far as two years.

Get in touch if you require our advice and guidance on the changes and how they’ll impact your organisation directly. 

This update is accurate on the date it was published, but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.