Holiday entitlement for staff


Iain Jenkins, employment partner at solicitor Lee & Priestley, outlines what small companies need to know about holiday legislation.

 Holiday entitlement for staff


Iain Jenkins, employment partner at solicitor Lee & Priestley, outlines what small companies need to know about holiday legislation.

Iain Jenkins, employment partner at solicitor Lee & Priestley, outlines what small companies need to know about holiday legislation.

Holiday entitlement is an area that many employers find daunting, due to contradictory court decisions and inconsistency with UK legislation. The Working Time Regulations 1998 (WTR) entitle workers who work five days a week to at least 5.6 weeks annual leave (28 days) in each holiday year. This includes the eight bank and public holidays in England and Wales. Here are some key elements of this entitlement.

• Part-time workers are entitled to the same level of holiday pro rata.
• There is no minimum period of service required to be entitled to these 5.6 weeks of holiday.
• The leave year can be specified by employers, or if not, this is set as 1 October each year.
• Employers may give more than the minimum 5.6 weeks’ leave.
• Employers can specify in writing the notice periods required before leave is taken, otherwise the notice period reverts to that specified in WTR (which is twice the period of leave that is requested).
• How much leave workers are permitted should be contained in their contract.
• Workers start building up holiday as soon as they start work.
• Employers can control when workers take their holiday in accordance with the needs of the business.
• Workers continue to be entitled to holiday leave throughout ordinary and additional maternity leave and paternity and adoption leave.
• There is no statutory right to paid leave on bank and public holidays.

Pay in lieu of holiday

• Statutory holiday entitlement may not be replaced by a payment in lieu, unless the worker’s employment is terminated.
• The rate of holiday pay is generally the normal pay rate for the worker.
• A recent European case has held that payment in lieu of holiday entitlement need only extend to the minimum four weeks’ statutory holiday entitlement under European law, rather than the additional 1.6 weeks holiday under the WTR.

Carry over of holiday

• The general rule under the WTR is that workers cannot carry over unused holiday into the next leave year and so they lose the untaken holiday. However European case law has previously held that workers are entitled to carry this over to the next leave year and UK tribunals have followed this.

• A recent European case provided that a worker on long-term sick leave cannot carry holiday over indefinitely, but should be permitted to do so for “substantially longer” than the holiday year period. In this case the carry over period for accrued but untaken holiday was limited to 15 months after the end of the leave year in question.

• There are currently contradictory decisions in our courts on whether workers have to request to carry over their holiday entitlement. In Fraser v Southwest London St George’s Mental Health Trust it was found that unless workers specifically request to carry over their holiday, the employer is under no obligation to do so. In addition holiday pay could only be claimed for the final year of employment. However, NHS Leeds v Larner held that holiday entitlement carried over to the next year despite no formal request being made. The Court of Appeal’s conclusion on this should be handed down shortly.

• In addition the Fraser case held that although workers are entitled to be paid in lieu of accrued but untaken holiday, this is only in respect of leave accrued during the leave year in which employment terminates. Accrued but untaken annual leave from previous leave years does not carry forward for the purposes of the payment in lieu entitlement where no request to take such leave was made by the worker.

Following its Consultation on Modern Workplaces, it is likely the government will consider the recent case law and the outcome of the European Commission’s consultation on the Working Time Directive and amend the WTR to allow accrued but untaken holiday to be carried over for possibly 15 or 18 months. In the meantime, in the absence of further guidance, employers should be wary of placing a limit on carry-over that is less than the 15-month period that was accepted by the ECJ and also consider the Court of Appeal’s decision in Larner.

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