what your business needs to know about holiday entitlement

What Your Business Needs To Know About Holiday Entitlement

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Holiday Entitlement pay is a complicated issue for any employer. With the lighter mornings setting in and with employees and employers envisaging a hotter climate, the need to know what employees are entitled to is important.

FAQ’s On Holiday Entitlement

1. Where is an employee’s annual holiday entitlement detailed?

It is a requirement of section 1 of the Employment Rights Act 1996 that an employee’s annual holiday entitlement is set out in their contract of employment/statement of particulars. Some companies also have an annual leave policy within their staff handbook which provides detail of how annual leave can be requested.

2. When does a holiday leave year run from and to?

There is no set annual leave year. It is customarily detailed within the contract of employment/statement of particulars or within the staff handbook. If there is no provision for a leave year then the holiday year starts the day an employee commences employment.

3. How much annual leave is a full-time employee entitled to?

An employee is entitled to a minimum of 20 days holiday plus 8 days bank holiday, equivalent to 5.6 weeks leave.

4. How is part-time annual leave calculated?

There is no ‘one way’ of calculating annual leave for part-time employees. Some companies simply pro rate the annual leave in accordance with days worked per week, others calculate it on the basis of which days you work and whether your working day would fall on a bank holiday.

5. Can any restrictions be placed on an employee taking annual leave?

Yes. An employee can be refused annual leave if it does not suit the needs of the business or is not requested in a timely manner. Employers usually deal with holiday requests on a first come first served basis. Employers can also expect employees to ‘save’ annual leave for the Christmas closure period with many companies automatically deducting between 2-4 days for the festive period. It is unusual to allow employees to take extensive annual leave during a probationary period.

6. Does an employee have to take all of their annual leave during the holiday year?

The aim of annual leave is to allow an employee a rest period away from work. The Working Time Regulations 1998 set down the minimum period of leave that an employee is entitled to and employees are entitled to this right. Employees, if contractually entitled to additional annual leave can, if permitted by their employer, roll untaken leave to the next holiday year or be paid in lieu.

7. If an employee cannot take annual leave due to sickness can the leave be taken at another time?

Yes. If an employee is unwell and cannot take their annual leave their entitlement to annual leave is not lost. It can be taken at another time. Annual leave accrues during a period of sickness. Recent European case law has determined that annual leave not exercised as a result of sickness can be carried forward for a maximum period of 15 months (this time limit may be subject to change).

8. If an employee’s employment is terminated are they entitled to payment in lieu of accrued but untaken annual leave?

Yes. Even if an employee is dismissed without notice for gross misconduct they are still entitled to be paid in lieu of accrued but untaken annual leave. A failure to pay accrued leave is a breach of contract.

9. Are agency workers entitled to annual leave?

Yes. Agency workers are entitled to annual leave in the same way that contracted employees are.

10. How is holiday pay calculated?

Holiday pay has traditionally been calculated on the basis of basic pay (that is pay without any allowance for benefits).  The Advocate General of the Court of Justice of the European Union (CJEU)  has now said that employees whose pay is commission based, should be entitled to holiday pay that includes their commission.

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