Holiday pay - what you need to know

It pays to know your team members' rights when it comes to paid leave, says XpertHR smallbusiness

How much paid holiday are workers entitled to take?

Under the Working Time Regulations 1998, workers are entitled to a minimum of 5.6 weeks' paid annual holiday. This equates to 28 days for someone working five days a week. The number of days is capped at 28, so even an employee working six days a week would be entitled to only 28 days' leave.

Employees may be entitled to contractual holiday entitlement in excess of this statutory minimum.

What are part-time workers' rights to paid holiday?

Like full-time workers, part-time workers are entitled to 5.6 weeks' paid annual holiday.

The number of days or hours that this 5.6 weeks' statutory holiday entitlement constitutes will vary depending on the number of days or hours that a part-timer works. For example, someone who works only three hours a day on Monday and Tuesday will be entitled not to come to work for those six hours a week for 5.6 weeks (33.6 hours), whereas a worker who works from 9am to 5pm four days a week will be entitled not to come to work for those four days for 5.6 weeks (22.4 days). Depending on the working pattern, holiday entitlement can be expressed in hours, days or weeks.

Can bank holidays be included in a worker's statutory leave entitlement?

Yes, the minimum 5.6 weeks' annual leave may include bank and public holidays. But there is no statutory right for workers to have bank holidays off work. This will depend on the terms of the contract.

How is pay calculated for holiday?

A week's pay is the amount a worker would expect to earn in a week. For workers whose pay varies, a week's pay is their average weekly earnings over the 12-week period ending with the week immediately preceding the date on which their holiday begins. A week's pay for a salaried worker is generally taken to be the worker's annual salary divided by 52.

Overtime hours do not form part of a worker's normal working hours for these purposes unless the employer is contractually bound to provide a specified number of overtime hours and the worker to work them.

Can workers take holiday whenever they like?

No. In the absence of any arrangement or agreement to the contrary, a worker must give notice equal to twice the length of the holiday that he or she wishes to take. The employer can give counter notice requiring that the leave not be taken, so long as this counter notice is equivalent to the length of the holiday requested, and the worker is not prevented from taking the leave to which he or she is entitled in that holiday year. Employers can also require workers to take leave at particular times, such as over the Christmas period or during an annual workplace shutdown. The employer must give notice equal to twice the length of holiday that it wishes the workers to take.

Can unused statutory annual holiday be replaced by a payment in lieu?

No, statutory holiday entitlement under the Working Time Regulations 1998 may not be replaced by a payment in lieu, except when the employment is terminated.

Will an employee who has resigned or been dismissed accrue holiday during his or her notice period?

Yes, workers should be paid for any outstanding part of the statutory entitlement to annual leave on termination of employment. A period during which an employee is working out his or her notice is a normal period of employment for this purpose. In other words, holiday entitlement for the employee's final part-year of employment should be calculated up to the end of the period of notice that he or she works.

In the absence of a policy or rule to the contrary, contractual holiday pay above the statutory minimum should be calculated in the same way as statutory holiday pay, in other words, based on the total period of employment through to the end of the employee's notice period.