Pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working. Her statutory entitlement in days is the lower of 28 days or 5.6 x 4 days (22.4 days). Melanie would qualify as a part-year worker if her contract reflects that there are periods of time that last more than a week when she is not contracted to work and does not receive pay. All references to ‘worker’ refer to all individuals whose employment status is either as a ‘worker’ or an ‘employee’, meaning they are entitled to paid holiday. Visit employment status for further information on employment status and definitions. It is not intended to be relied upon in any specific context or as a substitute for seeking advice (legal or otherwise) on a specific circumstance, as each case may be different.
Example: part-year worker on multiple periods of maternity or family related leave or who is off sick
We would encourage employers to ensure that working patterns are clear in their workers’ contracts. Relevant daily pay (RDP) is what the employee would have earned if they’d worked on the day. If an employer is unsure, they should seek advice or err on the how annual leave and holiday pay work side of caution and include the payment. From 1 January 2024 the following principles relating to the carryover of annual leave apply.
Table 1: calculation of statutory holiday accrual for irregular hours and part-year workers
Many employers choose not to distinguish between the 2 pots of leave, and to pay the entire 5.6 weeks at the ‘normal’ rate of pay. If an employer wishes to pay different holiday rates for different periods of leave, then they should consider explaining this clearly and consistently to the worker, for example in the worker’s contract or staff handbook. From a financial perspective, holiday pay provides an immediate monetary benefit to employees who work on holidays. It offers a higher pay rate, incentivizing employees to take on holiday shifts and contribute to the smooth functioning of the business. Annual leave, on the other hand, does not provide additional financial compensation during the time off.
Supervisors’ Request for Additional Information to Grant Annual Leave
Holiday pay can also be a motivating factor for employees to volunteer for holiday shifts, ensuring adequate staffing levels and uninterrupted services for customers or clients. Any untaken annual leave must be paid in the employee’s final pay and no deductions are allowed to be made from this leave balance unless there is a valid consent to the deduction from the employee. How payment is calculated depends on if the employee has an entitlement or just accrued leave. There are two instances in which an employee can be forced to take annual leave.
Employers using rolled-up holiday pay should calculate it based on a worker’s total pay in a pay period. A pay period is the frequency at which workers get paid, that is weekly, fortnightly, monthly, and the like. The regulations do not state which entitlement (4 weeks or 1.6 weeks) should be used first.
- If an employment agreement says that a payment is included in gross earnings, then it must be included.
- Employers should tell their workers if they intend to start using rolled-up holiday pay and for this payment to be clearly marked as a separate item on each payslip.
- If a worker has taken a period of leave within the 52-week reference period, then any weeks on which no pay was due should not be included when calculating pay (in contrast to the calculation of holiday accrued).
Other Available Leave Options and Work Schedule Flexibilities
If annual leave is carried over where a worker is paid using rolled-up holiday pay, the leave will already have been paid at the time the work was done. Rolled-up holiday pay allows employers to include an additional amount with every payslip to cover a worker’s holiday pay, as opposed to paying holiday pay when a worker takes annual leave. An employer must allow a worker who is unable to take their statutory holiday entitlement as they are on maternity or other family related leave to carry over all their holiday entitlement to the following leave year.
When gross earnings are used in holiday and leave calculations
- The relevant period would run from the day before the worker starts their maternity or family related leave or time off sick, going back for 52 weeks.
- They can choose when to take their leave, allowing for personalized planning and the ability to align with personal commitments or travel opportunities.
- Given that Paul does not work overtime, it is not the case that his hours worked are wholly or mostly variable.
- Employees can choose when to take their annual leave, subject to approval from their employer.
This may mean that the actual reference period takes into account pay data from further back than 52 weeks from the date of their leave. If this gives fewer than 52 weeks to take into account, then the reference period is shortened to that lower number of weeks. Her employer will need to calculate her statutory holiday entitlement after each of these leave periods. The government has introduced reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations. For example, if an employee’s daily pay varies in the pay period, but the variation is so regular and predictable that it’s also straightforward to determine RDP, the employer can choose either RDP or ADP.
2 Part-year worker
Instead, the employer should pay the worker an amount which fairly represents their pay for the length of time the worker is on leave. If a worker has not been in employment for long enough to build up 52 weeks’ worth of pay data, their employer should use however many complete weeks of data they have. For example, if a worker has been with their employer for 26 complete weeks, that is what the employer should use. An irregular hour’s worker or part-year worker will be entitled to carry over up to 28 days of leave in these circumstances. Again, this worker would need to use that leave they have carried over within 18 months starting from the end of the leave year in which it accrued. Sharon accrued 1 hour of statutory holiday entitlement while she was off sick.
This is so that employers know which workers the accrual method for entitlement and the introduction of rolled up holiday pay apply to. If you have employees that are on a casual employment contract, with no expectation or prospect of regular or ongoing work, then you are entitled to agree to pay on a ‘paid as you earn’ basis, if specific conditions are met. This can also apply to an employee on a genuine fixed term of less than 12 months. In these cases, an employee may be paid 8% of their gross weekly earnings on top of their pay as annual holidays provided it is specified in their employment agreement and is made clear to the employee. A calculation method has been introduced for leave years beginning on or after 1 April 2024 to help employers find out how much leave is accrued by an irregular hours or part-year worker in such circumstances.
However, the rules specify that an employer must not unreasonably withhold consent, so they must have considered the request and provide a valid business reason. Workers should not suffer detriment for querying whether they are receiving the correct holiday entitlement and pay. Employers should still only count back as far as is needed to achieve 52-weeks’ worth of pay data if this is less than 104 weeks. Whether bonuses are included in normal holiday pay depends on the nature of the bonus. An employer can only make deductions from an employee’s pay if these deductions are required by law, or are reasonable and agreed to in writing by the employee. Workers can normally carry over a maximum of 8 days into the next leave year, with the agreement of their employer.
Creditable Service for Leave Accrual
The date at which an employee can take annual leave is the first anniversary of their employment. However, there are some exceptions to this rule if, for example, your business has an annual closedown period (such as Christmas), or if an employee has taken unpaid leave of more than one week throughout the year. The reference period must only include weeks for which the worker was actually paid. Where this gives less than 52 weeks to take into account (that is, where the worker has many weeks without any remuneration), the reference period is shortened to that lower number of weeks.
If employers introduce changes to terms and conditions, they must seek to reach an agreement with their workers or their representatives. Employees can do up to 64 hours of paid work as ‘keeping-in-touch’ days (KIT days) while they’re on parental leave without it being considered a return to work. Annual Leave is what an employee is entitled to after working for 12 months. The 4 weeks Annual Leave gets added in one lump sum after 12 months of employment. An employer may decline a request for annual leave if they have a genuine business reason for doing so.