Holiday Entitlement and Pay – Your Questions Answered
Q: What is an employee’s minimum holiday entitlement per year?
A: The Working Time Regulations (“WTR”) provide for an annual entitlement of 5.6 weeks’ annual leave. Based on a standard Monday to Friday working week, this would be an entitlement of 28 days.
Q: Can bank holidays be included in the minimum statutory entitlement?
A: Yes. The 8 public holidays can be included in the 28 days leave.
Q: Following a flexible working request, we have allowed an employee to work part time, 3 days per week. We’re unsure how to calculate their holiday entitlement, particularly in relation to bank holidays.
A: Part time employees are entitled to holiday on a pro rata basis. If a full time employee is entitled to 28 days based on working 5 days per week, an employee working 3 days per week would be entitled to 3/5ths of this entitlement. Problems can arise where employees are given bank holidays that fall upon a day on which they ordinarily work in addition to a pro rata entitlement of annual leave. Bank holidays fall on different days each year and it could result in a situation where employees working identical hours (e.g. over 3 days) have a very different entitlement depending on the days they work. Furthermore, you may need to calculate their entitlement each year to ensure they are receiving the statutory minimum entitlement depending on when the bank holidays fall, or ‘top up’ their leave if appropriate. In the interests of equality and simplicity, it is usually preferable to also pro rata the bank holidays (regardless of whether they fall on a day on which they ordinarily work) to ensure that employees have the correct entitlement.
Q: Does holiday continue to accrue during maternity leave?
A: Holiday continues to accrue during maternity leave. Where it is not possible to use holiday before the period of maternity leave, it may be carried forward. A Company’s maternity policy may require the leave to be taken before returning to work.
Q: Can I insist that employees take any accrued holiday during their notice period?
A: Under the WTR, you can give notice to an employee to use their holiday entitlement during their notice period or on specific dates. The length of notice you must give is twice the length of the period of leave that the worker is being ordered to take.
Q: An employee has made a request to carry forward their holiday entitlement into the next holiday year. Is this allowed?
A: Under the WTR, annual leave entitlement is a form of rest break. An employee who is only entitled to the statutory minimum 28 days leave would not therefore be permitted to carry forward any unused leave or be paid in lieu of unused leave other than upon the termination of their employment as they are required to take a minimum number of designated rest periods. If they have a contractual entitlement to holiday in excess of the statutory 28 days, they may be permitted to carry forward any entitlement over and above the 28 days if permitted to do so by their contract of employment.
Q: An employee fell ill during their holiday and has requested to take that holiday entitlement at another time instead. Is this allowed?
A: Based on the current legal position, the employee may be entitled to take the leave at another time. However, this will depend on the Company’s absence reporting procedures and whether the employee has complied with them, reporting their absence at the time.
Q: Does holiday continue to accrue during sick leave?
A: An employee continues to accrue annual leave whilst absent. An employee who has not been able to take their full annual leave entitlement due to sickness is permitted to carry it over into the next holiday year.
Q: Can an employee utilise their holiday entitlement when off sick for financial reasons?
A: Employees on long term sick are permitted to use their annual leave during their absence and would need to be paid for their leave at the usual rate of pay rather than SSP or zero pay.
Q: How much pay should an employee receive when they take a days’ holiday?
A: The WTR implement the Working Time Directive (WTD) in the UK. Under the WTR, employees are entitled to be paid at the rate of a week’s pay for each week of leave. However, the WTD requires workers to receive their “normal remuneration” during periods of leave. Following a recent decision, the courts ruled that ‘normal remuneration’ should generally factor in certain types of overtime that employees work. Similarly, ‘normal remuneration’ may also need to take account of commission and bonuses. This means that the WTR are currently in conflict with the WTD and must be interpreted to conform to it. Holiday pay should now be calculated by averaging out the payment earned by the employee over a ‘reasonable’ period of time before the employee’s holiday dates, to include relevant overtime, commission and bonuses.
For further advice and information, please call Lianne Payne on 024 7623 1000
Askews Legal LLP -Coventry Solicitors.
