Holiday entitlement for staff

Alison King outlines what small companies need to know about holiday legislation

Holiday entitlement can be daunting for many employers due to the intricacies of UK legislation and new rules introduced during the coronavirus pandemic.

The law states that almost all workers who work a five-day week are legally entitled to 5.6 weeks of paid holiday per year (otherwise known as leave entitlement or annual leave). This includes agency workers, those with irregular hours and workers with zero-hours contracts.

Here are the key elements of the holiday entitlement rules:

  • Part-time workers are entitled to the same level of holiday pro rata (but this will amount to fewer than 28 days). The Government has a holiday entitlement calculator to help you work this out
  • No minimum period of service is required to be entitled to 5.6 weeks of annual leave
  • Employers can specify the leave year
  • Those working irregular hours are entitled to accrue paid leave for every hour they work
  • Employers can require employees to work on a bank holiday and take the annual leave on an alternative date. Likewise, employers can offer more than the minimum 5.6 weeks leave
  • All workers should have their leave entitlement specified within their contract of employment and an employee will start to accrue leave from the moment they start work
  • Employers are able to specify (in writing) the notice period which should be given before the leave is taken. If not, then the notice period reverts to that specified by law (which is twice the period of leave being requested)
  • Employers are legally allowed to control when periods of leave are taken, particularly if it will have an impact on the business
  • Staff on maternity, paternity or adoption leave will continue to accrue holiday leave

>See also: HR for start-ups – how to get it right

Coronavirus and carry-over holiday

  • Coronavirus does not impact workers entitlement to holiday pay and leave, except for the introduction of new carry over rules. Staff who were furloughed are entitled to accrue leave in the same way had they been at work
  • How many days leave an employee can carry over into the next year should be specified in the contract. If a worker gets 28 days leave, they are entitled to carry over a maximum of eight days. However, if they receive more than 28 days then employers can allow them to carry over additional untaken leave (again depending on what’s specified in their contract)
  • Workers can now carry over untaken leave into the next two years if they are unable to take it because their work has been affected by coronavirus (depending on industry and company policy). This covers a number of factors such as: covering for co-workers, no opportunity to take leave as this would impact the business with all staff on leave at once or if they are classified as critical workers and needed during the pandemic
  • If an employee is unable to take all of their leave entitlement due to already being on another type of leave (such as maternity or sick leave) then they are entitled to carry over some or all of their untaken leave into the next year
  • The law states that employers have to allow workers to carry over a maximum of 20 days from their 28 days if that employee couldn’t take any annual leave in the leave year because they were off sick.

>See also: Varying employee contracts: the law

Pay in lieu of holiday

  • Employers cannot replace statutory holiday entitlement by payment in lieu, unless the employee’s contract of employment has been terminated
  • Holiday pay is at the same rate as normal pay for employees and should be specified as such in the employment contract

Calculating holiday pay

Another responsibility for employers is calculating holiday pay. Remember that employees are entitled to a week’s pay for each week of statutory leave they take. This means that most are entitled to 5.6 weeks of paid holiday each year.

To work out what a week’s pay is – employers need to look at the hours that employee works and how they are paid. This includes those working full-time, part-time, term time and casual workers. The Government has a useful holiday calculator.

  • Employees on fixed hours and fixed pay (full or part time): a worker’s pay for a full week
  • Those on shift work with fixed hours (full or part time): calculated on the average weekly fixed hours they have worked in the past 52 weeks (based on their average hourly rate)
  • Those with no fixed hours (including zero hours contract): the average pay for the past 52 weeks (but only including the weeks they were paid)

How much notice do you need to book holiday?

There is a general rule around the notice period required to book time off. This is twice as long as the amount of leave requested plus one day. So, for example, an employee would give four days’ notice for two days of leave.

The same works in reverse. Employers can refuse or cancel holiday requests but must also give as much notice as the amount of leave requested (plus one day). This is unless the employment contract says differently.

Controlling when leave is taken

Employers are entitled to tell staff when to take leave (such as Christmas and bank holidays). They can also restrict times when leave is taken, such as busy periods for the business. This should be included in the employment contract. The notice period for restricting leave is at least twice as long as the leave the employee wants to take. Employers can also not enforce employees to take leave if they are sick.

Alison King is managing director at Bespoke HR

Further reading

Employee wants to convert SSP to annual leave

Alison King

Alison King

Alison King is managing director at Bespoke HR.

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