Part-time and Shift Workers Face Holiday Pay Cut of £248 Million Due to UK Rule Change

Ministers are set to implement a cut in holiday allowances and pay for part-time and irregular workers, potentially impacting staff by up to £248 million annually.

The amendment, which comes into effect next month, has raised concerns among workers and labour advocates, prompting calls for a reconsideration of the decision.

The government is overhauling the method of calculating holiday entitlement and pay for individuals engaged in non-full-time employment throughout the year, including those on zero-hours contracts, shift workers and school employees.

Experts argue that this adjustment represents one of the most significant erosion of employment protections since the UK departed from the EU working time directive.

Under the revised regulations, approximately five million workers in the UK with temporary or irregular contracts will no longer receive their full holiday entitlement at the beginning of the year, aligning with the approach for full-time employees. Instead, they will gradually accrue holiday rights throughout the year.

Traditionally, holiday pay for such workers was calculated based on an average of their earnings over the previous 12 weeks.

However, under the revised regulations, this reference period is set to extend to 52 weeks. Critics argue that this change could disadvantage workers with fluctuating incomes, as the longer timeframe may dilute the impact of higher-earning periods.

A government representative remarked: "We are undertaking legislative reforms to simplify overtime, holiday pay and entitlement regulations, making them less intricate and more straightforward for employers to adhere to."

Justin Madders, the opposition's spokesperson on employment rights, said: "This government has rejected Labour's initiatives to safeguard paid holidays. They have unequivocally broken their manifesto commitment to advancing workplace rights.

"Labour's New Deal outlines our strategy to ensure work is remunerative, fostering a high-growth, high-wage economy, fortified by job security and robust labour rights."

The UK government, which introduced the rule change as part of its ongoing efforts to streamline employment regulations, maintains that the decision was made after thorough consultation with both employers and trade unions.

However, the backlash from workers and their representatives suggests that there may be a disconnect between the perceived benefits of the change and its potential impact on the ground.

Labour officials could not assure that they would reverse the modification if they secured victory in the next election.

According to government estimates, the new rules will affect just over five million employees, particularly in sectors like education, where term-time contracts are prevalent, and retail, where irregular shifts and zero-hour contracts are common.

A government analysis released this week projects that the alteration will result in annual savings for employers ranging from £50 million to £248 million.

Nevertheless, officials caution that uncertainties surround the number of individuals adversely impacted, as it remains unclear how many employers were compliant with the Supreme Court's previous case law.

A spokesperson stated: "It is very difficult to know exactly how many employers were following the previous case law, so the figures involved are speculative and likely a significant overestimate."

Officials attribute the ability to implement the new rules, in part, to the UK's departure from the EU, which included relinquishing the stringent labour laws governed by the working time directive.

Richard Arthur, head of trade union law at Thompsons Solicitors, stated: "This move takes advantage of what the government is allowed to do post-Brexit. The government is taking that opportunity and bringing in new rules to the advantage of employers."

As part-time and shift workers brace themselves for the impending reduction in holiday pay, the debate surrounding the rule change is likely to intensify.

Worker advocacy groups are calling for a review of the decision, urging policymakers to consider the financial implications for those who already face challenges in the gig economy.

With the rule set to take effect in the coming weeks, the true extent of its impact on the UK's part-time and shift workforce will soon become apparent.