Statutory Holiday Pay

All workers have a statutory entitlement to a minimum of 5.6 weeks’ paid annual leave. If you work 5 days a week, this amounts to 28 days. The employer may include Bank/Public Holidays within this minimum statutory amount. Ensure that details of holiday entitlement are clearly documented within the individual’s Contract of/for Services, including how and when to book holidays and how entitlement is calculated and when and how paid. (

The basics:

1. To qualify for entitlement you need to be classed as a worker; if you are self-employed, you have no statutory rights to paid annual leave.
2. Whilst there is a minimum entitlement, an employer can choose to offer more than this.
3. Part time workers are entitled to the same entitlement on a pro rata basis.
4. Your employer can control when you take your holiday.
5. Holiday entitlement may include part days (e.g. 11.2 days if you work 2 days a week). They cannot be rounded down nor do they need to be rounded up. Check with the employer as to their policy, e.g. allowing a full days holiday but only paying the part day owed.
6. The basic calculation is, 5.6 (weeks) divided by 46.4 (52 minus 5.6) multiplied by 100.
7. Holiday pay should be paid during the time you actually take your holiday in accordance with The Working Time Directive and recent case law on holiday pay (including the Lock decision). Incorporating an element of additional pay into a worker’s hourly rate (“rolled up holiday pay”) is considered unlawful. Some will maintain that this can be done as long as the payment is clearly and transparently explained and made. However please note that this is NOT the position according to current case law.
8. It is usual for temporary workers to have their entitlement calculated by using a percentage (12.07%) of their hourly pay rate based on the calculation set out at point 6 above.
9. You will accrue paid holiday entitlement from the moment you start work although you must give your employer advance notice of when you want to take your holiday. Unless otherwise agreed, the notice should be at least twice as long as the holiday required, e.g. 2 weeks’ notice for 1 week’s holiday. Your employer can refuse permission and should give notice at least as long as the holiday requested.
10. Your employer may request you take part of your annual entitlement at certain times (this should be explained within your contract) such as Bank Holidays or business shutdowns.
11. You may be unable to take all your entitlement within your leave year because of illness. Recent ECJ judgements mean that a worker may be able to carry forward your entitlement to the next holiday year.
12. Recent case law has also determined that workers may still accrue holiday entitlement whilst on sick leave. They continue their statutory entitlement throughout ordinary and additional maternity leave and paternity and adoption leave.
13. When you leave employment you are entitled to be paid in lieu for any accrued and untaken statutory leave. If you have overtaken your entitlement then the employer should not automatically make a deduction from pay unless it has been agreed or the procedure is outlined in the workers contract.

14. During any periods of annual leave, workers should receive a “week’s pay for a weeks’ leave”. Where a worker has “normal working hours”, a week’s pay should be calculated with reference to those hours. Recent case law has found that holiday pay should include an element referable to any commission, overtime and bonuses that are “intrinsically linked” to the performance of the worker’s contractual duties; this includes both “guaranteed” and “non guaranteed” overtime, where the worker is required to work overtime if it is offered. Where a worker does not have “normal working hours” a week’s pay is calculated as an average of all remuneration earned in the previous 12 working weeks, including overtime, commission and other elements. There has been concern that claims for underpayment of holiday pay could be retrospective over many years but it has been confirmed that claims will be out of time if there has been a break of more than 3 months between underpayments. [Current government advice (December 2014) can be found here.]

This is a complex area, particularly as a result of recent case law. TEAM Members may wish to consult with a member of TEAM Legal for more specific assistance.

This is only intended to provide a general overview and very basic guide. This is not Advice and should not be taken as such. We hope it helps but if more detailed assistance is required then please contact an employment lawyer.
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