The Working Time Regulations 1998 (WTR) set out the minimum amount of paid leave to which an employer or worker is entitled. The Employment Rights Act 1996 (ERA) sets out the amount of pay for that amount of holiday. In neither act did the Government get around to saying when the holiday pay should be paid. For that we have to rely on case law.
To understand the legislation one first has to understand that there are two categories of employees/workers; those with normal hours of work and those without.
For employees/workers with normal hours of work, full-time or part-time the rules are relatively simple. If an employee/worker is contracted to work five days per week their minimum entitlement is 4 weeks x 5 days = 20 days per annum. The amount of pay would be their normal daily rate times the number of days taken. The daily rate would be 1/5 of 40 hours assuming days of equal length.
If overtime is voluntary it is disregarded from all calculations – if it is guaranteed then it is included and the total hours are used for calculation.
A part-timer with normal hours i.e. the same contracted number of hours/days each week would receive that amount pro-rata to four weeks. Thus someone who works two days every week (say Tuesday and Wednesday) would receive 4 x 2 days = 8 days paid holiday per annum.
However there then arises, for such part-timers, bank/customary holidays. Bank holiday Mondays, Good Friday and Easter Monday will always fall on days during which such a part-timer would not work. Consequently they are not entitled statutorily to those days as holidays or for pay for them. (Their individual contractual terms might provide for these days to be paid should you wish to do so).
Christmas Day, Boxing Day and New Year’s Day rotate (erratically) through the days of the week. They will therefore, at sometime or other fall on a Tuesday and/or a Wednesday. If you close your business on those days, thereby effectively denying those individuals the opportunity to work, you will be bound to pay them. (Statute says nothing about the rate of pay for those who do work on Bank/customary holidays – save for those governed by the Agricultural Wages Order (AWO) which is detailed in this regard. Also statute says nothing about any enhanced day(s) off, unless controlled by the AWO).
For an employee/worker without normal hours i.e. they may work a day one week then none for a week, work two days in the next week, then three, then none etc the ERA states:
(2) The amount of a week’s pay is the amount of the employee’s average weekly remuneration in the period of 12 weeks ending –
(a) where the calculation date is the last day of a week, with that week, and
(b) otherwise, with the last complete week before the calculation date.
(3) In arriving at the average weekly remuneration no account shall be taken of a week in which no remuneration was payable……and remuneration in earlier weeks shall be brought in…”
In other words i.e. plain English, you go back the last 12 weeks, ignoring any in which no work was done and add-up the total earned during those twelve weeks. Divide by 12 and that becomes a week’s holiday pay. (If there is not a total of 12 to be added-up, average over the highest number of weeks possible).
It is important to note that just because someone works normally 40 hours per week occasional overtime worked does not make this a week with no normal hours and consequently it does not change the calculation to a 12 weeks running average.
In October this year the statutory minimum entitlement will rise to 4.8 weeks per annum and to 5.6 weeks on 1st October 2008.
