Why Irregular Hours Workers Matter in Recruitment

The UK government introduced the irregular hours worker classification in the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, effective for leave years starting on or after April 1, 2024. The classification was created specifically to fix the holiday pay calculation problem exposed by the Supreme Court's ruling in Harpur Trust v Brazel 2022], where the Court held that term-time workers were entitled to statutory holiday pay calculated without reference to the weeks they didn't work — producing results that the government acknowledged were disproportionate for genuinely variable workers.

For staffing agencies placing temporary and zero-hours workers, this classification matters because it changes how statutory holiday entitlement is calculated and paid. Getting it wrong creates both underpayment liability (unpaid holiday pay claims in employment tribunals) and overpayment waste (paying holiday on income that should be excluded). The new rolled-up holiday pay method — legal again for irregular hours workers as of April 2024 — is the mechanism most agencies will use in practice, but it requires correctly identifying which workers fall into the irregular hours category first.

Agencies that applied the Brazel methodology to all variable workers during 2022-2024 may have overpaid some and underpaid others, and the correction exercise requires careful records analysis.

How the Irregular Hours Worker Classification Works

Under the 2023 Regulations, a worker qualifies as an irregular hours worker if their contractual hours in each pay period are wholly or mostly variable. "Wholly or mostly" is interpreted in context, but HMRC guidance indicates that workers with genuinely unpredictable weekly hours — such as those on zero-hours or casual contracts with no guaranteed minimum — clearly fall within the definition.

Once a worker is correctly classified as an irregular hours worker, their holiday entitlement is calculated using the 12.07% method: each hour worked in a pay period generates 12.07% of that hour as holiday entitlement, which accrues up to the statutory maximum of 5.6 weeks. Rolled-up holiday pay — paying 12.07% on top of the hourly rate in each payment rather than accumulating an accrued holiday pot — is now expressly lawful for these workers, ending years of uncertainty following the Court of Justice of the European Union's decision in Robinson-Steele v R D Retail Services 2006].

For a staffing agency placing bank nurses on a purely casual basis — they work when called, with no guaranteed hours from week to week, and may work zero hours in some weeks — each nurse qualifies as an irregular hours worker. The agency adds 12.07% to each nurse's hourly pay as rolled-up holiday, labels it clearly on the payslip, and the calculation is complete. No separate holiday pot, no accrual tracking, no complex calculation when a worker takes a leave year break.

The classification does not apply to workers with fixed or relatively fixed hours, even if those hours vary slightly week to week. A part-time worker contracted for 20 hours per week, even with occasional overtime, is not an irregular hours worker. Misapplying the irregular hours classification to workers who should be treated under the standard holiday pay calculation creates underpayment liability.

Irregular Hours Worker vs Zero-Hours Worker

These categories overlap but are not synonymous. A zero-hours worker has no contractual guarantee of hours — each engagement is offered and accepted separately. An irregular hours worker, as defined by the 2023 Regulations, is identified by the variability of their actual hours rather than their contract structure. A zero-hours worker is almost always an irregular hours worker for holiday pay purposes, but a worker on a minimum-hours contract (say, a guaranteed 4 hours per week) whose actual hours regularly vary between 4 and 40 may also qualify depending on how "wholly or mostly variable" is applied to their specific situation.

Agencies with mixed contractor populations need to classify each group separately and not assume that all zero-hours workers sit in the irregular hours category without examining the actual hours data.

Irregular Hours Workers in Practice

A hospitality staffing agency places casual waiting staff for events across the UK, with no contracted hours and shifts assigned on a week-by-week basis. After correctly classifying all casual waiting staff as irregular hours workers under the 2023 Regulations, the agency's payroll team implements rolled-up holiday pay at 12.07% of gross hourly pay, shown as a separate line on every payslip. The agency's holiday pay liability is calculated consistently with each pay run rather than being reconciled at year-end. On audit by HMRC, the agency's holiday records are clean and complete, and two historic underpayment claims filed under the old methodology are resolved by demonstrating that post-April 2024 payments have been fully compliant.