|Public and religious holidays|
|The leave year|
|Issues to consider|
|Termination of employment|
|Holidays and sickness|
- Holidays and holiday pay are two of the terms that must be set out in the written statement of terms and conditions of employment or in the contract of employment.
- Every worker (i.e. not just employees) is entitled to 5.6 weeks’ paid statutory leave a year under the Working Time Regulations 1998 (WTR). Apart from this, holidays and holiday pay are a contractual matter between employer and employee.
- Contractual holidays go towards discharging the obligation to give statutory leave and, where a worker has both statutory and contractual leave, he can take advantage of whichever right, in any respect, is the more favourable.
- It is unlawful to pay holiday pay as part of the hourly rate of pay (so-called 'rolled-up holiday pay'): workers should be paid for their holiday at the time they take it.
- All workers are entitled to 5.6 weeks’ paid annual leave (equivalent to 28 days for someone who works a 5-day week).
- A part-time worker is entitled to a pro-rata amount of the 28 days according to the amount of time they work.
- No period of continuous service is required to qualify for statutory leave.
- A worker whose employment begins half way through the leave year accrues holiday for that year on a pro-rata basis.
Public and religious holidays
- Employees have no automatic or legal entitlement to take time off on public/bank holidays.
- The right to paid time off on a public/bank holiday may however already exist as a result of an express or implied term in staff contracts or via custom and practice in the industry concerned.
- The statutory entitlement to 5.6 weeks' holiday can include public/bank holidays.
- Employers that need staff to work on public/bank holidays should make the requirement to work clear in the contract or statement of terms and conditions.
- Where an employer wishes to limit employees' annual paid holiday entitlement to the statutory minimum of 5.6 weeks, it should expressly state in the contract or written statement of terms that holiday entitlement is inclusive of bank and public holidays.
- The Gov.uk website has a list of public holidays in England, Wales, Scotland and Northern Ireland.
- The Interfaith Calendar website lists the dates of the various religious festivals.
The leave year
- Under the Working Time Regulations the leave year starts on the date set out in a 'relevant agreement' - this may be the contract of employment or a collective or workforce agreement.
- The default position is that the leave year starts on the date the individual’s employment started. Employers will normally therefore provide for a leave year common to all their employees.
- The Working Time Regulations 1998 state that statutory holiday may only be taken in the leave year in respect of which it is due; there is no right to carry unused holiday forward into the next holiday year. However case law has cast doubt on this, particularly where holidays cannot be taken in the leave year due to sickness.
- In the first year of employment, a worker's entitlement actually to take paid annual leave is subject to a system of accrual; he or she is entitled to one-twelfth of the statutory annual leave for every month worked.
- The amount of time that can be taken at any one time during the first year of work can be rounded up by up to half a day. For example, someone working 5 days a week who has worked for 2 months would be entitled to take 4.6 days, and so could take 5 days.
Issues to consider
- Employers should specify all rules and procedures relating to holidays, either in a staff handbook, collective agreement or employment contract.
- Examples of the types of issues which should be covered in holiday rules and procedures include the following (these are mainly relevant to contractual as opposed to statutory leave):
- What happens where the employee asks for, but is refused, holiday leave and he then takes the leave or claims to be ill during the relevant leave period?
- How will contractual holiday pay be calculated – particularly for employees whose pay varies according to hours worked or productivity levels?
- Will employees be allowed to take holidays within a certain time of returning to work following sickness absence?
- What happens where an employee does not take all of his or her contractual holiday entitlement? Can unused holiday be carried forward into the next holiday year?
- When an employee is required to work on a public/bank holiday, is he or she awarded another day’s paid holiday and/or paid an additional sum for working on such a day?
- Are employees required to take annual leave at specified times, e.g. during annual shutdown or over Christmas period?
- On termination of employment does the employer want the right to require the employee to take any outstanding holiday entitlement during the notice period?
- How will new employees with already booked holiday be dealt with?
- On termination of employment, what happens when the employee fails to give the contractual notice period? Does the employer want to reserve the right to withhold payment for untaken contractual holiday entitlement (where it is otherwise payable)?
- Does the employer wish to exclude the right to receive outstanding contractual holiday pay when the employee is dismissed summarily for gross misconduct?
- What is the procedure for staff who return late from holiday?
- If there is no agreement containing rules and procedures on annual leave, the Working Time Regulations provide that:
- a worker must give notice to take annual leave which must be at least twice the length of the leave he is intending to take (i.e. if the worker wants to take 2 weeks’ leave, he must give 4 weeks’ notice)
- the employer can serve a counter-notice which must be at least the length of the leave (i.e. if the employee is asking for 2 weeks’ leave, the counter notice must be served at least 2 weeks before the intended leave date
- Part-time workers are entitled to 5.6 weeks’ annual entitlement, pro-rated according to their working pattern.
- If full time workers have holiday entitlement over and above the statutory minimum, part-time workers must also have an additional pro-rata amount.
- Part-time workers should be given a pro-rata entitlement to public holidays regardless of whether they normally work on days on which the holidays fall.
Termination of employment
- If a worker’s employment terminates, he is entitled to be paid in lieu of any unused annual leave.
- If the worker has taken more than his leave entitlement, the employer has the right to recover payment from the worker on termination of his employment.
- Employers can require a worker who is serving out his notice period to take unused holiday during the notice period - this avoids the employer having to make a payment for unused holiday on termination and keeps the worker out of the workplace.
Holidays and sickness
- Employees accrue statutory holiday rights during sick leave (regardless of the length of the sick leave) and are entitled to request, take and be paid for holiday whilst they are off sick.
- Employees whose employment ends following a period of long-term sick leave are entitled to be paid in lieu of untaken statutory holiday for the leave year in which they are terminated.
- European case law says that where a worker does not want to take annual leave during a period of sick leave, that annual leave must be granted to him or her for a different period - even if this runs into another leave year.
- Case law developments have highlighted the need for employers to review sickness and holiday policies and have clear rules on the reporting of sickness absence, and medical evidence, especially where the sickness occurs during booked annual leave.
- The Holidays and Sickness Checklist looks at this topic in greater detailand provides pointers for employers on how to handle this tricky area of the law.
- Annual leave rights are in addition to maternity leave and maternity leave cannot be treated as annual leave.
- Statutory and contractual leave continue to accrue throughout both ordinary and additional maternity leave as if the employee was at work.
- Where bank holidays form part of the statutory entitlement, employees on maternity leave should be given time off in lieu of bank holidays that fall during the maternity leave period.
- Claims for unpaid holiday or a payment on termination of employment can be brought either under the Working Time Regulations or under the unlawful deductions from wages provisions in the Employment Rights Act (ERA).
- Both claims have a 3-month time limit, but under the ERA, employees can bring claims in respect of a series of deductions. An employee who has been on long-term sickness absence can bring a claim on termination covering the whole of a sickness absence period (which spans more than one holiday year), assuming that no paid holiday has been granted for any of that period.
- Claims relating to contractual (as opposed to statutory) holiday pay may be claimed as breach of contract or unlawful deductions from wages.
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