13 FAQs about holidays
- Do we have to give paid time off for bank holidays in addition to 5.6 weeks' annual leave?
- How do we calculate average weekly pay for holiday pay purposes?
- Do we have to give paid holiday to casual workers such as temps?
- Does an employee continue to accrue paid holiday even if they are on long term sick leave?
- Can we claim the money back from an employee who is leaving if they haven't worked a full year but have taken a full year's holiday entitlement?
- Do we have to allow people to carry forward unused holiday?
- What should we do if someone consistently refuses to take their full holiday entitlement?
- Do we have to accommodate a worker who wants to take three months' unpaid leave?
- Can we require people to work on the bank holiday if we have important work that needs to be completed?
- Do we have to pay double time on a bank holiday instead of offering time off in lieu?
- A new recruit is claiming they are already entitled to more than a week's paid holiday off. Is this true?
- Can we turn down holiday requests during our busiest time of year?
- Do we have to approve a holiday request for a last minute holiday?
1. Do we have to give paid time off for bank holidays in addition to 5.6 weeks' annual leave?
No, unless specifically set out in an employee's contract of employment. It is advisable to set out clearly:
- the employee's right to time off on bank and public holidays
- whether that time off is paid
- what you will pay if the employee works on a bank or public holiday
If you do pay employees for holiday taken on a public or bank holiday you can count that towards their statutory minimum holiday entitlement. The statutory minimum holiday entitlement is 5.6 weeks (equivalent to 28 days for anyone who works a five-day week).
Depending on when your holiday year starts, employees may be entitled to part days. Part-timers, temporary staff and casual workers - who are entitled to paid holiday on a pro-rata basis - are also likely to be entitled to parts of days, so it makes sense to develop a policy for dealing with them. The options are:
- you can round up (but not down)
- you can carry holiday entitlement forward (but everyone must take at least four weeks in the leave year)
- you can only give payment in lieu of holiday for any holiday entitlement in excess of the statutory minimum (5.6 weeks)
- you can devise a system for late starting or early finishing to get the part-days out of the way
Calculate holiday entitlement
Calculating how much holiday an employee is entitled to isn't always straightforward, especially if the employee joins your company part-way through the year, works part-time or works flexible hours.
This holiday calculator on the GOV.UK website explains the rules on UK holiday entitlement and holiday pay, how much holiday your employees are entitled to in hours or days and the rules on rolling over leave.
2. How do we calculate average weekly pay for holiday pay purposes?
If an employee receives a wage for normal working hours which does not vary with the amount of work done, you pay the net fixed wage, including any fixed amounts normally paid on a regular basis (for example, bonuses).
If an employee receives a wage for normal working hours that does vary with the amount of work done, you will have to calculate what their average hourly rate was over the past 12 weeks, ignoring any premium element for overtime.
Holiday pay is calculated by multiplying the average number of normal weekly working hours by the average hourly rate. If there are no normal working hours, holiday pay is calculated from average weekly pay over the previous 12 weeks. The Working Time Regulations set out a fairly complicated method for calculating holiday pay sums. Care should be taken in approaching these calculations.
An Employment Appeal Tribunal (EAT) [Lock v British Gas Trading] has confirmed that average commission must be included in any holiday pay calculation in addition to non-guaranteed overtime pay. This decision means that workers who rely on overtime and commission to make up their wages will not be disadvantaged when they take the holiday to which they are entitled. However, you can take comfort from a subsequent EAT ruling which has clarified that a gap of more than three months between non-payments or underpayment of wages including holiday pay breaks a ‘series’ of deductions for which you would be liable.
You should review your holiday pay rates if you have workers who have an element of their salary made up from commission or overtime payments, and legal advice should be sought.
3. Do we have to give paid holiday time to casual workers such as temps?
Employees, casual workers and temps are all entitled to holiday pay, with the entitlement accruing from the beginning of employment. From 1 January 2024, you can include 'rolled-up' holiday pay as part of their wages. For someone entitled to 5.6 weeks' annual leave, rolled-up pay would be an extra 12.07 per cent.
4. Does an employee continue to accrue paid holiday even if they are on long term sick leave?
They are entitled to as much paid holiday as has been accrued - and the period of sick leave counts towards their accrued holiday entitlement.
5. Can we claim the holiday pay back from an employee who is leaving if they haven't worked a full year but have taken a full year's holiday entitlement?
Yes, but you cannot deduct the holiday pay overpaid from the final wage payment unless there is a written agreement for the deduction of wages. Failing such an agreement, it may in practice be difficult to get the money back, unless you are prepared to sue. You must decide whether that would be worth doing, both in terms of the money involved, and the message to other employees.
6. Do we have to allow people to take forward unused holiday?
No: there is no obligation to do so. Some employers develop their own policies, permitting some flexibility (for example, holiday for one year cannot be carried forward beyond the end of the following March).
Employers may not demand that employees carry forward any part of their statutory holiday, and must ensure that at least four weeks' paid holiday is taken in each leave year.
7. What should we do if someone consistently refuses to take their full holiday entitlement?
There are a number of potential dangers to you, including burnout, a later demand for pay or time off in lieu, and health and safety issues.
In respect of burnout, there is not much you can do, apart from consistently encouraging your employee - if necessary in writing - to take more holiday, and keeping an eye on them for other symptoms of stress.
In respect of a later demand for pay, or time off in lieu, make it plain in your terms and conditions of employment that employees are expected to take their holidays within the year (or such later time as you think reasonable - see 6). Also make it plain that you do not provide pay in lieu of holiday (except in respect of any holiday entitlement outstanding from the final year of employment).
In respect of health and safety issues, you should consider whether the employee is endangering themselves, or perhaps even other employees, by working without taking appropriate rest periods. If so, you will have to insist that holiday be taken, if necessary making it a matter for disciplinary action.
8. Do we have to accommodate a worker who wants to take three months' unpaid leave?
Not necessarily. You must give qualifying new mothers 26 weeks’ ordinary maternity leave and 26 weeks’ additional maternity leave (maternity leave is only paid for 39 weeks - the remaining 13 weeks’ leave is unpaid) in the first year of their baby's life (if they want it). New mothers can transfer some of this leave to their partners if they return to work before the end of their paid maternity period under shared parental leave legislation. All parents with children under the age of 18 are entitled to 18 weeks’ total unpaid leave per child with a maximum annual entitlement of four weeks’ leave per child. Employees are also entitled to short-term unpaid emergency dependants’ leave. Otherwise you are not obliged to give anyone unpaid time off. It may be worth your while to do so, if this is a valued worker whom you would otherwise lose but, if so, make it plain that this is an exceptional case.
9. Can we require people to work on the bank holiday if we have important work that needs to be completed?
Yes, unless they have the right in their contracts of employment to take bank holidays off (see 1). You must, however, give adequate notice - one day for each day you require your employees to be available for work.
10. Do we have to pay double time on a bank holiday instead of offering time off in lieu?
No, unless an employee's contract says they should be paid double time, or an employee is treated in some way different from the rest of your employees, in which case they might be able to claim they were being discriminated against. In more general terms, it does not seem like an excessive demand to be paid double time on a bank holiday, but if you feel strongly about it, how about aiming for a compromise at time and a half? Or asking for volunteers instead? Or putting it to all your employees, and asking what they think would be fair? This is the kind of minor grievance that can blow up out of all proportion: since you have been given early warning, take it.
11. A new recruit is claiming they're already entitled to more than a week's paid holiday. Is this true?
It depends on how much paid leave you give new recruits, how long they've actually been with you, and where you are in the year. Employees now accrue paid leave from the first day of employment, with their rights accruing at one-twelfth of the annual entitlement per month worked, rounded up to the nearest half day. If your new employee was entitled to four weeks and two days (22 days) of annual leave at the time the question was raised, and had been with you for exactly two months, they would be entitled to take off:
(22 ÷ 12) x 2 = 3.66 days off, rounded up to the nearest half day = 4 days
However, the legal entitlement increases in advance, at the start of each month, so if your employee had been with you for any part of month three, their entitlement would be:
(22 ÷ 12) x 3 = 5.5 days, rounded up to 6 days.
12. Can we turn down holiday requests during our busiest time of year?
Yes. You can specify when holidays can be taken, provided that everyone gets at least 5.6 weeks off at some time during the year. However, if your workers have asked for time off, you will have to serve them with a written counter notice, rejecting the request. This notice has to be sent out at least as many days in advance of the holiday, as the length of the holiday requested. So for instance, if you have an employee who asks for two weeks off at an inconvenient time, you have to let them know this is unacceptable, at least two weeks before the holiday is due to start.
13. Do we have to approve a holiday request for a last minute holiday?
No. You are entitled to ask for two days' notice, for every day of leave requested. So if your employee wants to take two weeks off, they should have given you four weeks' notice. Given the holiday bargains now available to people prepared to book at the last minute, it might make sense for you to spell out your notice requirements in your terms and conditions. You can then make exceptions if it seems reasonable and convenient to do so.