Key updates from the Good Work Plan & holiday pay changes
Stephanie Pote · Posted on: March 14th 2025 · read
When was the last time you had your contracts of employment or policies and procedures reviewed and why should you do this?
Reviewing contracts of employment and policies and procedures periodically is crucial to ensure they remain legally compliant and aligned with current business needs. The frequency of reviews can vary, but generally, it’s recommended to do so every few years or whenever there are significant changes in employment laws or company policies. This helps to update terms and conditions, ensure fairness, and mitigate legal risks for both employers and employees.
Since April 6, 2020, significant changes to UK employment contracts have been implemented originally under the Good Work Plan and with legislative changes thereafter. Employers must ensure their contracts reflect the following key updates:
Written Statement of Employment Particulars
- From April 2020 a written statement is required from day one: Previously, employers had up to two months to provide this statement, but it must now be given on or before the first day of employment.
- Extended to all workers: This requirement now includes workers, not just employees.
Additional Information Required in Contracts
- From April 2020 the written statement must now include additional details, such as:
- Full details of working hours (including any variable patterns and break entitlements).
- Paid leave entitlements (beyond annual leave, e.g., maternity/paternity leave).
- Any probationary period (its conditions and duration).
- Details of training provided (including mandatory training and whether it’s paid for by the employer).
Changes to Holiday Pay Calculations
- This is a key area within the written terms that changed in April 2020 and then changed again in April 2024 for leave years commencing from 1 April 2024 onwards.
- The April 2020 changes were for employees with irregular hours (e.g., seasonal or casual workers), the holiday pay reference period increased from 12 weeks to 52 weeks. This provided a fairer holiday pay calculation.
- From 6 April 2024 the amended legislation allows employers to calculate holiday entitlement on an accrual basis using the old 12.07% method. For each holiday year, a worker is entitled to 5.6 weeks’ leave (statutory minimum). When calculating holiday entitlement as a percentage, you acknowledge that those 5.6 weeks of the year will not be worked so it is calculated as 52 weeks minus 5.6 weeks is 46.4 weeks.; then 5.6 divided by 46.4 is 12.07%.
- If an employer has workers with holiday entitlement above the statutory minimum the percentage for calculation will be higher than 12.07%.
- The new rules will give employers the option of paying irregular and part-year workers “rolled-up holiday pay” whereby the worker is paid holiday pay alongside their other pay and not when they actually take the leave.
- OR employers can choose to continue using the 52-week averaging method which is currently in place.
More details are available in the February 2024 newsletter. If you need support in understanding which payments should be included within the calculation for holiday pay, we can advise and complete calculations where required.
Our expert's final thoughts
"If your contract has not been reviewed and amended since April 2020 you may want to consider a review of this at the earliest opportunity. It is possible that there are clauses within old contracts that would be deemed unlawful and could ultimately lead to Employment Tribunals.
HR Solutions can review your existing contracts of employment and amend and update them or provide you with new templates as required."
