Annual leave 101
Entitlement
All employees and workers (e.g. zero hours, casual, bank staff) are entitled to a statutory minimum of 5.6 weeks annual leave including bank holidays. This equates to 28 days for a full timer (5.6 x 5 working days per week). Some employers grant more than this – but 5.6 weeks is the legal minimum.
The law makes no distinction between annual leave and bank holidays. There is no specific entitlement to be granted leave on a bank holiday, but contracts of employment may state holiday must be taken on these days, or time off on these days is not to be expected – as per organisation needs.
Annual leave continues to accrue during periods of absence including family-related leave.
Holiday pay
Annual leave must be paid at the individual’s normal rate of pay. This should take into account the value of any overtime, commission or any other monies that would normally be received. An individual’s pay should never fall below normal levels of pay received due to taking annual leave. Where pay does drop, it has the potential to make a person consider whether to take leave or not – and taking leave is an important feature of working safely; ensuring the workforce is suitably rested so when they are working, they are safe.
Taking leave
Employers should endeavour to ensure the 5.6 weeks entitlement is taken by their workforce in each holiday year. It’s important that this rest time away from work is used, so there is no scope for any untaken entitlement to be carried over into the next holiday year (unless there are circumstances where requested leave could not be granted) or to be paid up (in any circumstances other than on termination of employment).
There is however, freedom for employers to allow for carry over and paying up of any entitlement in excess of the statutory 5.6 weeks entitlement.
Many employers have a ‘use it or lose it’ policy with annual leave. This is only enforceable where the employer has pro-actively reminded their workforce at least twice during the year of this policy. It is good practice to actively manage annual leave to ensure the workforce is suitably rested, to provide adequate staffing levels throughout the year and to avoid bottlenecks of leave requests at the end of the holiday year.
Part timers
It is best practice to include bank holidays in the annual leave entitlement calculation to ensure someone working part time hours receives their fair share of all the bank holidays. They are entitled to the bank holidays pro-rata no matter what their normal working days are.
For example:
Employee A works 3 full days per week. 3 x 5.6 = 16.8 days annual entitlement including bank holidays.
Always round up holiday entitlement calculations, so in this example entitlement would be 17 days. Never round down as this could mean providing less than the minimum statutory entitlement.
A person working 5 part-days per week is still entitled to 28 days annual leave – the value of what is paid is simply less than that of someone working a full day.
In practice, a day’s annual leave is deducted from an individual’s entitlement when they receive the benefit of the bank holiday i.e. when they work less than their contracted hours in a week where a bank holiday falls.
If their working hours are unchanged by the bank holiday (i.e. it falls on a non-working day or full contracted hours are worked in the week) then no deduction is made from entitlement and the individual can take that’s day’s leave flexibly as they wish in line with the normal annual leave booking procedure.
It may be that a person working part time hours feels they are receiving less annual leave entitlement where they are required to take a day’s leave on a bank holiday – for example where the organisation is closed on bank holidays. They are not receiving less entitlement; they just have less flexibility on when their entitlement can be taken. Employers could if they wish, enable additional hours to be worked in these circumstances so that a deduction from annual leave entitlement is not necessary – if it suits the needs of the organisation.
Where working hours and pay varies
For individuals who work different hours each week or whose pay varies due to commission or overtime, a pay reference period of 52 weeks should be used to determine what pay should be received during periods of annual leave.
They remain entitled to 5.6 weeks annual leave and when leave is taken, employers should deduct the amount taken from the individual’s entitlement (use weeks/part weeks rather than days) and pay them based on their average pay of the preceding 52 worked weeks (or however many weeks they have worked if it is less than 52).
Note that when calculating average pay, any weeks where the individual does not work are excluded. Employers should count back (to a maximum of 104 weeks) to include a total of 52 weeks where work was performed.
Still got questions?
They are very common – particularly for part timers! Don’t hesitate to get in touch.
