Holidays

Amount

The Annual Leave Regulations 2007 provide workers with four weeks’ paid leave each leave year ('statutory leave'). This is the minimum amount an employer has to provide, but employers may provide more holiday entitlement in the contract if they wish ('contractual leave').

Bank Holidays

Holiday entitlement under the Regulations (or contract of employment) can be inclusive of bank holidays. This means that an employer does not have to offer bank holidays as a separate time off.

A worker has no automatic entitlement to a day off on a bank holiday under the Regulations. Entitlement to time off on a bank holiday depends entirely on the terms agreed in the contract of employment.

Calculating entitlement

The Regulations require workers to receive four weeks’ leave. A 'week’s leave' reflects what a normal working week looks like for the individual worker.

If you work a set number of days

Example:

• 5-day week = 20 days' leave
  
  
• 3-day week = 12 days' leave
  
  

Leave year

Annual leave entitlement is calculated for each leave year, which is usually set out in the contract of employment.

If a worker joins or leaves part-way through a leave year, their entitlement may be pro-rated.

Unless a worker is unable to take leave due to family leave (for example, maternity leave) or sick leave, there is no right to carry holiday entitlement into the next leave year unless the contract of employment allows this.

First year of employment

Leave accrues (builds up) monthly at 1/12 of the annual entitlement, rounded up to the nearest half-day.

Maternity Leave

If a worker has a more generous leave under her contract of employment (for example, 30 days), during Ordinary Maternity Leave they will continue to accrue leave in line with their contractual entitlement.

However, during Additional Maternity Leave, only the statutory leave entitlement continues to accrue.

Specific rules apply where an employee resigns while on maternity leave, particularly in relation to their rights during the notice period. For guidance on these situations, please contact MIRS.

Sick Leave

When a worker takes more than 26 weeks’ sick leave in a leave year then their entitlement to annual leave will being to be reduced.

The reduction is calculated using the following formula:

8 × ((52 × P) − S) ÷ 52

Where

• S = the number of complete weeks of sick leave taken in that leave year
  
  
• P = 1 for a complete leave year, or for part-years, the proportion of the leave year remaining on the date the worker started work.

Where entitlement includes a proportion of a week, this is calculated in days and any fraction of a day is treated as a whole day.

A worker who is on sick leave for the entire leave year will have no statutory entitlement to annual leave for that year.

Holiday pay

Holiday pay is based on what a worker normally earns:

• Fixed salary: a week’s pay equals the normal weekly wage
  
  
• Commission or piece work: based on the average hourly rate over the previous 12 paid weeks
  
  
• Shift or rota workers: based on average hours worked over the previous 12 weeks
  
  
• No normal working hours: average pay over the last 12 paid weeks

A longer reference period (up to 26 weeks) may be agreed in writing.

Rolled-up holiday pay

Rolled-up holiday pay is where holiday pay is included within wages and spread throughout the year, rather than being paid when leave is taken.

This arrangement is permitted if certain conditions are met, including:

• A written agreement; and
  
  
• Clear identification of the holiday pay element on pay statements

Even where rolled-up holiday pay is used, workers must still be allowed to take time off for holidays.

When employment ends

If employment ends during the leave year, the worker must be paid for any accrued but untaken leave, calculated using the statutory formula:

(4 × A) − B

Where:

• A = the proportion of the leave year that has expired before the termination date
  
  
• B = the amount of leave taken between the start of the leave year and the termination date

This payment is not rounded up.

If the contract provides more generous terms, those terms apply.

If a worker has taken more leave than they have accrued, they are only required to repay this if the contract of employment includes a specific clause allowing recovery. Without such a clause, the employer cannot deduct the overpayment from final wages, as this may amount to an unlawful deduction from pay.

Timing of leave

Procedures for requesting and taking leave may be set out in the contract of employment or implied from custom and practice.

Employers may also:

• Close the business for certain periods (for example, TT week)
  
  
• Nominate certain days of closure when workers are expected to take annual leave; or
  
  
• Place limits on the amount of leave that can be taken at one time

If no procedure is set out in the contract, both the worker and the employer must give notice equal to at least twice the length of the leave requested.

For example:

• If a worker wishes to take 3 days’ leave, they must give 6 days’ notice
  
  
• Where an employer intends to refuse a leave request, they must give notice equal to the period of leave requested. Using the example above, the employer would need to give 3 days’ notice
  
  
• If an employer requires a worker to take 5 days’ leave at Christmas, they must give at least 10 days’ notice

For more detailed information, please see the Department for Enterprise Guide to Holidays and Holiday Pay below.