Most workers are legally entitled to paid holidays/annual leave. From 1 April 2009, a worker's statutory paid holiday entitlement is 5.6 weeks (28 days for a worker working a five-day week). This can include public and bank holidays. The entitlement for part-time workers is calculated on a pro-rata basis. This guide shows you how to calculate a worker's holiday entitlement and pay. It also explains notice requirements and how you may impose restrictions on when workers can take their holiday. Finally, the guide demonstrates how to pay leavers for any untaken holiday. Statutory paid holiday entitlement Almost all workers above school leaving age - not just employees but also, for example, agency and casual workers - are entitled to 5.6 weeks' paid holiday (28 days for a worker working a five-day week). The 5.6 weeks is a minimum entitlement - you can choose to offer more. You can count any days off for public or bank holidays towards a worker's statutory holiday entitlement - but only as long as you pay them for that day off. Workers below school leaving age must have a two-week break during school holidays. Staff working a six-day week The statutory paid holiday entitlement is capped at 28 days. So, although 5.6 weeks would equate to 33.6 days for someone working a six-day week (5.6 x 6), staff working a six-day week are only entitled to 28 days' paid holiday. Holiday entitlement and the contract of employment You must set out a worker's paid holiday entitlement in their contract of employment. This should enable them to work out their entitlement and pay for any untaken holiday if they leave. Workers not covered by the law on minimum paid holiday entitlement The following types of worker do not have the right to benefit from the minimum paid holiday entitlement: the self-employed those working in sea fishing those working in merchant shipping mobile workers on inland waterways Carrying over unused paid holiday A worker may wish to carry over unused holiday from the current leave year to the next. Staff must take at least four weeks' leave per year. Therefore, if you and the worker agree, any holiday on top of this can be carried over. Outstanding statutory paid holiday must be taken by the end of the next leave year. Page 1 of 7
Payment for holiday A worker's entitlement to paid holiday/annual leave starts on the first day of employment and is not subject to a minimum period of employment. For each week of leave accrued, workers are entitled to one week's pay. A week's pay is calculated according to the type of work carried out: for workers on fixed hours and pay, it equals the amount due for a week's work for workers on variable hours and pay (bonus, commission or piece workers), it equals the average hourly rate multiplied by the normal working hours in a week for shift workers, it equals the average weekly hours of work in the preceding 12 weeks at the average hourly rate Payments for untaken holiday Workers are entitled to 5.6 weeks' paid holiday each leave year. They must also take a minimum of four weeks' holiday each year. You cannot make payments in lieu of any untaken holiday for the 1.6 week's above the four weeks. However, you can make payments in lieu of any leave above the 5.6 weeks if you agree or the worker's employment contract allows. It is also unlawful to pay workers for their statutory holiday entitlement through a system of rolled-up holiday pay. Employees must receive their holiday pay at the time that leave is actually taken, rather than as an allowance spread over the year. New starters Workers whose leave year is tied to your business' leave year and who start working for you part-way through it are entitled to paid leave proportionate to the rest of that leave year. When leave years may start You may decide to have one date when your business' leave year starts or have different start dates for individual workers (or groups of workers). In the absence of written leave arrangements, a leave year will start: on the date a worker's employment begins - if the worker started work after 1 October 1998 on 1 October - if the worker started work on or before 1 October 1998 Calculating holiday entitlement for atypical workers There are alternative ways of working out the holiday entitlement for workers who don't have regular working arrangements or patterns. Part-time workers Paid holiday entitlement is calculated pro-rata for part-time workers. So if a member of staff works three days a week, they are entitled to 16.8 days (5.6 x 3). Shift workers It is sometimes easier to calculate holiday entitlement as shifts. Page 2 of 7
So if a member of staff works four 12-hour shifts followed by four days off, the average working week is 3.5 12-hour shifts. So 5.6 weeks' holiday is 5.6 x 3.5 = 19.6 12-hour shifts. For other shift patterns, it may be easiest to calculate according to the established repeating pattern. More irregular working patterns: calculating holiday in hours If a member of staff annualised hours, you need to calculate how many hours a week are worked on average over the whole year. So if a member of staff works a total of 1,600 hours a year, or 34.48 hours a week over 46.4 weeks of the year, the holiday entitlement is 5.6 weeks x 34.48 hours a week = 193.09 hours' holiday for the year. The statutory holiday entitlement is excluded from the average working week calculations. Arrangements for term-time-only workers will depend on their contract of employment. If they work a reduced number of weeks during the year, they accrue a pro-rata entitlement to paid leave. You need to calculate how many hours a week are worked on average over the whole year and exclude the statutory holiday entitlement from the average working week calculations. For example, a worker works 1,600 hours over 40 term-time weeks during the year. This is the equivalent of 34.48 hours a week over 46.4 weeks of the year. Therefore their paid annual leave entitlement is 5.6 weeks x 34.48 hours a week = 193.09 hours holiday for the year. If they don't take annual leave during term time, the worker actually works 1,600 hours and accrues holiday on the whole 1,600 hours = 193.09 hours' holiday. However, if their contract requires them to take their annual leave only during term time they accrue holiday on the weeks (or hours) they actually work. For someone working compressed hours, for example, a 36-hour week over four days instead of five, their annual holiday entitlement is 36 hours x 5.6 weeks = 201.6 hours holiday for the year. Rather than taking a day's holiday, they would take the number of hours that they would have otherwise worked on that day (ie for 36 hours worked over four days, they would take nine hours' holiday for each day otherwise worked). Casual workers If a member of staff works on a casual basis or very irregular hours, it is often easiest to calculate holiday entitlement that accrues as hours are worked. The holiday entitlement of 5.6 weeks is equivalent to 12.07 per cent of hours worked over a year. The 12.07 per cent figure is 5.6 weeks' holiday, divided by 46.4 weeks (being 52 weeks - 5.6 weeks). The 5.6 weeks are excluded from the calculation as the worker would not be at work during those 5.6 weeks in order to accrue annual leave. Page 3 of 7
So if someone works 10 hours, they are entitled to 72.6 minutes paid holiday (12.07/100 x 10= 1.21 hours = 72.63 minutes). Part days Calculations may result in part days (eg 22.4 days for someone working four days a week). Holiday entitlement for employees on other statutory leave Employees taking statutory maternity, adoption, paternity and parental leave will continue to accrue statutory paid holiday and, in many cases, any contractual holiday entitlement. Holiday entitlement and maternity/adoption leave Employees on maternity or adoption leave continue to accrue statutory paid holiday during both ordinary and additional maternity/adoption leave. Employees who were due to give birth or adopt a child before 5 October 2008 only accrue any contractual holiday entitlement during ordinary maternity/adoption leave. Employees due to give birth or adopt a child on or after 5 October 2008 accrue any contractual holiday entitlement during both ordinary and additional maternity/adoption leave. Statutory paid holiday cannot be taken at the same time as maternity/adoption leave. When you are planning for the maternity/adoption leave, you may wish to discuss taking any outstanding holiday and perhaps delay the start of their maternity/adoption leave. Alternatively, it may be possible for them to take holiday in the period between their maternity/adoption leave finishing and the end of the leave year. When you are planning, you should both be aware that maternity and adoption leave cannot start later than the date of the child's birth or placement for adoption, so an early birth or placement could shorten the amount of annual leave the employee is able to take. Holiday entitlement and paternity leave Employees continue to accrue their statutory and any contractual holiday entitlement while they are on statutory paternity leave. Holiday entitlement and parental leave Employees continue to accrue their statutory paid holiday entitlement while they are on parental leave. Whether or not they accrue any contractual holiday entitlement depends on their contract of employment - or you can decide on a case-by-case basis. Pay and time off on public and bank holidays You do not have to give staff paid time off for bank and public holidays. However, you should set out in a worker's contract of employment: any right to time off on bank and public holidays whether or not that time off is paid Page 4 of 7
what you will pay them if they work one of these days, ie whether you will pay the normal rate of pay or an enhanced rate, eg 'time-and-a-half' or 'double time' Note that if you allow a worker time off for bank and public holidays over a significant period of time, it may become an implied term of their contract via custom and practice, ie the term is not actually written into the contract but is still part of it. Part-time staff have the same entitlement to leave as full-time workers. Therefore, if full-time staff are given paid leave for bank and public holidays, part-time workers should also receive this benefit on a pro-rata basis. Bank and public holiday dates When the Christmas and New Year public holidays fall at a weekend, other weekdays are declared public holidays. These are usually the following Monday and, if necessary, the Tuesday. If a worker normally works weekends, and Christmas Day, Boxing Day or New Year's Day fall on a weekend, entitlement to time off depends on the employee's contract. This may be something that is explicitly agreed in the terms of the employment contract or could have been incorporated through custom and practice. Find out about bank holidays in the UK on the Directgov website Easter bank holidays Because the date of Easter varies, some April-March leave years may contain two Easters and others none. For example, if you give your full-time staff four weeks' holiday plus time off for bank and public holidays, that would mean 30 days' holiday one year and 26 days another. In such cases, to ensure your full-time staff receive their statutory 28 days' holiday, you should either: agree with workers that the necessary holiday is carried over in a leave year where two Easters fall give an additional two days' holiday in a leave year where Easter doesn't fall (to ensure staff get their minimum 28 days' holiday that year) Special bank holidays s of bank holidays can be changed or extra holidays declared, for example to celebrate special occasions. The most recent examples of special bank holidays were the Millennium holiday in 1999 and for the Queen's Golden Jubilee in 2002. If any new bank holidays are introduced, employers should agree with their staff how these are treated. Page 5 of 7
Taking holiday - notice periods, restrictions and sickness Workers must give you notice that they wish to take leave. You can agree the notice period with your workers and should set this out in writing. If there is no agreement in place, they must give notice of at least twice the length of the intended leave period. You must reply within the same length of time as the intended leave. For example, if the worker gives two days' notice for one day's leave, you must reply within one day. Even if the worker gives sufficient notice, you may still refuse the request - but be as reasonable as you can. Restricting when holiday may be taken You may restrict the taking of leave. Restrictions could: be stated in the employment contract have built up via custom and practice, or be negotiated with a trade union or employee representatives Examples include: specifying periods when leave may or may not be taken capping the amount of leave that can be taken at any one time shutting down for certain periods, eg between Christmas and New Year or for two weeks in August If you don't have an agreement for taking leave and you want workers to take all or part of their holiday entitlement on certain dates, you must give notice of at least twice as long as the leave period. Resolve clashes between requests for leave by considering the needs of the business, eg peak season or a quieter period, the individual circumstances or by setting out clear rules for booking leave. It may be helpful to formalise cover for key staff on annual leave. If you set restrictions on when holiday can be taken, bear in mind the need to avoid indirect discrimination. If you prevent a worker from taking their 5.6 weeks of paid annual leave in a leave year, they can complain to an employment tribunal. Sick leave and holiday entitlement A worker continues to accrue their statutory minimum holiday entitlement as normal while absent from work due to sickness. Depending on the terms of their employment contract, they may also accrue any additional contractual annual leave that they would normally be entitled to. If an employee is on sick leave for the whole of a leave year, they are still entitled to paid annual leave. This means that you would have to pay them full pay rather than sick pay - or no pay if their sick pay period has ended - for at least 5.6 weeks of that leave year, even if they never come to work over that period. If a worker becomes ill just before some booked annual leave or during the holiday itself, they do not have any automatic right to convert that holiday to sick leave. However, you may choose Page 6 of 7
to take a sympathetic approach, with a policy that allows staff to reclaim such annual leave for use at a later date if they can produce a medical certificate. Holiday pay on termination of employment When your workers leave - even if you have dismissed them without notice for gross misconduct - they must receive pay for any holiday they are entitled to in the current leave year but have not taken. This entitlement is not subject to a minimum period of employment. Calculating pay due to workers who leave Pay due can be calculated using the formula (A x B) - C, where: A is the total holiday entitlement for the year B is the fraction of the year to the date of leaving C is the amount of holiday already taken So if the entitlement is 28 days per year and the employee leaves three months into the year having taken two days off: (28 x 3/12) - 2 = 5 days' leave to be paid in lieu. You need to get the worker's signed agreement to make a deduction from the final payment to them for any leave taken in excess of their entitlement. If a worker's employment is terminated, they have the right to be paid for leave accrued during the time of employment, no matter how short a period of employment. In such cases, holiday entitlement is based on the date they would have left if they had worked the full notice period, unless the employee agrees otherwise. The employment contract or written statement of employment particulars should contain information to enable workers to calculate their entitlement to accrued holiday pay when they leave. Taking annual leave during the notice period A worker may wish to take some or all of their outstanding annual leave as part of their notice period. This should be treated the same as for any other holiday request - taking into account your usual procedure for authorising annual leave. You can also insist that a worker takes any holiday owed to them as part of their notice period. If a worker takes part of their paid leave entitlement during their notice period you may reduce their notice pay by the amount of holiday pay, provided it is in respect of the same leave year. Useful contacts / information Acas Helpline: 08457 47 47 47 website www.acas.org.uk Acknowledgment: This information has been supplied by Business Link. For more information visit www.businesslink.gov.uk Page 7 of 7