Who is entitled to paid holiday?
All employees and workers, workers being those who don’t have full employment status, but are engaged on the basis of providing personal service.
How is the holiday leave entitlement calculated?
The statutory right is to 5.6 weeks’ paid holiday each year, which equates to 28 days for those working five days a week (note that those working more than 5 days are still only entitled to 28 days). There is no statutory right to time off on public holidays, but holidays provided for on such days are included in this figure.
What about part-time, casual and zero hours workers?
The entitlement is still to 5.6 weeks holiday per year. The entitlement for a part-time worker is sometimes expressed as being ‘pro rata’ to a full-time worker which is correct if the entitlement is considered in terms of days rather than weeks, i.e. for a worker working three days, 5.6 weeks equates to 16.8 days leave, (equation 28 days / 5 days a week x 3 days a week = 16.8 days leave).
In the case of casual or zero hours workers, their statutory entitlement will accrue at the rate of 28/232 days holiday for each day worked (232 being the number of working days in the year minus the 28 days of holiday).
How do I calculate holiday pay for zero hours and casual workers?
For workers who do not have any normal working hours, or whose pay varies according to either the amount of work done (piece workers) or the time of work (varying shift patterns) holiday pay must be based on the average pay over the previous 52 weeks (any weeks in which the worker didn’t receive any pay must be omitted from the calculation, and the reference period extended into earlier weeks to ensure the requisite 52 paid weeks are covered).
Can the employer calculate the monthly value of holiday and ‘roll up’ with normal salary?
No – Whilst not an uncommon practice in the past, particularly for zero hours and casual workers, this practice has been deemed to be unlawful. Workers must be allowed to actually take their leave and be paid for it at the time it is taken.
Does overtime need to be included in holiday pay?
Holiday pay will need to take account of guaranteed overtime and any non-guaranteed overtime which has been worked for a sufficient period of time in order for it to be considered ‘normal’, in which case the calculation should be based upon a 12 week reference period.
What about commission and bonuses?
For workers who earn commission or bonuses which are ‘intrinsically linked’ to the performance of the tasks that the worker is required to carry out, these should also be included in any calculation of their normal remuneration for the purposes of calculating holiday pay. The reference period used to calculate pay in such cases should be that which is ‘relevant’ to the particular circumstances, which may be longer than 12 weeks where such reference period would lead to scope for the employee to maximise holiday pay by taking holiday immediately after a period in which they received the most commission or bonus.
What happens if a worker becomes ill whilst on holiday leave – can the employer treat it as holiday?
Where a worker falls ill during a period of holiday leave they can choose to take sick leave instead of annual leave and then take the annual leave at a later date, including carrying it over if it is not possible to reschedule in the current leave year. (Although strictly speaking, this only applies to the first four weeks of annual holiday leave, and the employer could choose to apply different rules to the additional 1.6 weeks).
Can the employer impose a period of holiday leave?
Yes, the employer can require workers to take leave at a particular time or times. This might be in relation to a company shutdown or may just apply to a particular worker or group. In such cases the employer must give notice to the worker which must be at least twice as many days in advance of the start of the leave as the duration of the leave, e.g. in the case of requesting a worker to take a particular week of leave, the employer would need to give the employee at least two weeks’ notice ending the day before the first day of leave.
Where an employee is working their notice period, the employer can require them to take any accrued but untaken holiday entitlement during the notice period.
Can unused holiday leave be carried over into the next year?
The first four weeks of holiday leave must be taken in the leave year to which it relates, and carryover into the next leave year is only allowed in specific circumstances, namely where the employee has been unable to take all of their leave either due to long term sickness absence or a period of maternity/adoption/shared parental leave.
With regard to the further 1.6 weeks of leave, employers can permit any unused element to be carried forward to the next leave year if they choose.
Can the employer make a payment in lieu of unused holiday if agreed by both parties?
No, payment in lieu of any part of unused statutory leave, even where it is with the worker’s agreement, is not allowed, except at the point where the worker’s employment is terminated.
You can take a look at our full fact sheet on our resources page, along with a number of other topics.