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Holiday Entitlements - Useful Information

Annual Leave Entitlement

Employees' holiday rights start on the first day of their employment. Employees do not have to wait before they build up holiday rights.
Employees are entitled to a minimum of 5.6 weeks paid annual leave - equating to 28 days for an employee working five days a week. Part-time employees are entitled to the same level of holiday pro-rata (5.6 times the employee's normal working week e.g. 22.4 days for an employee working a four day week).
Employees do not have an automatic right to paid leave on bank and public holidays, though many people receive the day off work. Any right to time off or extra pay for working on a bank holiday depends on the terms stated in the employee's contract of employment.

Holiday Pay

Holiday pay must be the employee's normal rate of pay. In line with recent court rulings there must be no financial disincentive for an employee taking annual leave.
All types of overtime, including voluntary, must be included when calculating a worker's statutory holiday pay entitlement, apart from overtime that is only worked on a genuinely occasional and infrequent basis.
Commission should be factored into statutory holiday pay calculations.

There are different rules for calculating holiday pay depending on the working patterns involved:

For workers with fixed working hours - If a worker's working hours do not vary, holiday pay would be a week's normal remuneration.
For workers with no normal working hours - If a worker has no normal working hours then their holiday pay would still be a week's normal remuneration but the week's pay is usually calculated by working out the average pay received over the previous 12 weeks in which they were paid, or any other timeframe that fairly reflects their normal pay. From 6 April 2020, you will need to look at the average number of weekly hours and pay from the previous 52 weeks, instead of 12.
For shift workers - If a worker works shifts then a week's holiday pay is usually calculated by working out the average number of hours worked in the previous 12 weeks at their average hourly rate, or any other timeframe that fairly reflects their normal pay. From 6 April 2020, you will need to look at the average number of weekly hours and pay from the previous 52 weeks, instead of 12.

It is not permissible to ‘roll up’ holiday pay by paying a little bit extra throughout the year. Holiday pay must be paid when the holiday is actually taken.

Scheduling Leave

Employers can control when employees take their leave or can rule out holidays during certain times of the year (unless a contract of employment states otherwise).
Unless the employment contract states otherwise, employees should give their employer notice of their intention to take leave. This should be at least twice as long as the holiday that they want to take. For example, an employee should give at least two weeks’ notice for a one-week holiday.
Employers must answer leave requests at least as far in advance as the length of leave requested. For example, they must answer a request for one week’s leave at least one week before the leave is due to start.

Leavers

Should an employee leave employment during the holiday year, their employer must settle up on the employee's holiday entitlements. An employee has the right to be paid for any untaken statutory holiday entitlement that they have accrued.

Other Leave Types and Holidays

A worker's entitlement to holiday pay will continue to accrue during sick leave (both paid and unpaid). If a worker is unable to take their annual leave in their current leave year because of sickness, they should be allowed to carry that annual leave over. Any leave carried over in this manner should generally be used within an 18 month period after the end of the leave year in which the leave accrued.
An employee may choose to specify a period where they are sick but still wish to be paid annual leave at their usual annual leave rate.
If you are on statutory maternity, paternity, adoption, shared parental or parental bereavement leave you are still entitled to paid annual leave as well.

Other

Details of an employee's annual leave entitlements must be included in their contract of employment, or written statement of terms of employment. Note: This statement is required by law and from April 2020 must be provided to all workers by their first day.
Employers are well advised to have a clear annual leave policy in the handbook and contract of employment in order to clarify the manner in which annual leave may be taking, ultimately avoiding confusion and conflict in this matter. Further information can be found here.

Carry Over of Annual Leave - Relaxation of rules due to Coronavirus disruption

The rules in relation to the carry over of annual leave have been temporarily relaxed to deal with the coronavirus disruption.

The Government has announced that employees and workers who are unable to take their annual leave due to coronavirus may carry over up to four weeks’ paid holiday into the next two leave years.

The Working Time (Coronavirus) (Amendment) Regulations 2020 will amend the Working Time Regulations 1998 to create an exemption relating specifically to the coronavirus outbreak.

Employees may be unable to take their annual leave for a number of reasons, including:

they are working in key sectors and due to work demands cannot take annual leave,
they are self-isolating or are too sick to take holidays before the end of their leave year,
they have been temporarily sent home, placed on layoff or furlough leave.

If an individual leaves their job, either by resigning or due to dismissal during the two-year period, any untaken paid holiday must be added to their final pay. The government has stressed that employers should ensure in so far as possible that workers have adequate opportunity to take their holidays. An individual should not be paid in lieu for holidays unless they are leaving.

The change will apply to most workers including agency workers and those on zero-hours workers.

The temporary change relates only to 4 weeks leave. Employers who do not currently have a policy on the carry over of leave, may decide whether they will allow for extra holidays to be carried over. Extra holidays may include: