Workers are entitled to a statutory minimum of 5.6 weeks (capped at 28 days) paid holidays each annual leave year. This entitlement includes eight bank holidays. This can be increased and workers may be contractually entitled to more than the minimum.
If a worker works part-time, or if they start or leave work part way through an annual leave year, then their holiday entitlement is calculated on a pro rata basis. Employers need to careful and use the correct calculation, as they can easily find themselves in breach of the law.
The holiday year can start on whichever date is specified in the worker's contract. If no date is specified, the leave year will start on the first day of service. This can lead to an administrative headache for the company.
Apart from perhaps in the first year of service, each worker does not accrue entitlement throughout the year. This means that a worker will assume their full years' entitlement as soon as the annual leave year begins. There are however ways in which the taking of the holidays can be restricted.
The entitlement to holiday leave continues to accrue even when an employee is on long-term absence, for example during sickness or maternity leave.
When requesting or directing to take leave, a worker and employer should both give the other enough notice that is at least twice the length of the proposed holiday. The length of the notice can be extended by the contract.
How much a worker should be paid when taking holiday leave isn’t always a straightforward matter. This can be complicated by:
whether a worker works irregular hours
whether a worker is normally paid commission and/or a bonus
whether a worker works overtime and, if so, what kind of overtime it is
the 5.6 week entitlement being made up of 4 weeks 'EU based leave' and 1.6 weeks being 'UK based leave'.
The inclusion (or not) of any commission, bonuses or overtime payments within holiday pay generally only applies to the four weeks EU based leave. However, even then, whether or not it should actually be included is really only determinable on the facts of each individual case.
Even in circumstances where a worker is to be paid basic pay for a week, the amount of basic pay may not be straightforward if a worker does not work set hours each week. Here, a calculation using the average pay over the preceding 12 weeks may be acceptable.
Upon termination, a worker should be paid in lieu of any annual leave entitlement they have accrued but not taken. If they have taken more than they had accrued, an employer may be able to recover the overpayment directly from the worker's final pay if allowed by the worker's contract.
Understandably, it can be easy to give workers their incorrect entitlement, whether this is the amount of leave due or the payment for it. Please feel free to contact our team for advice.
The information contained within this page is for guidance only and is not to be relied upon as legal advice. If you require specific legal advice, please contact our team for support.