Previously, employees were entitled to a minimum of 20 days paid holiday each year. As of October 1, 2007, this statutory minimum has been increased to 24 days paid holiday per year.  And from April 1, 2009, this will increase to 28 days per year.

The objective of these changes is to enable employees to have the benefit of the eight days of public holiday to which there was previously no statutory entitlement. So what are the rules relating to holiday entitlement in the workplace?

Implementing changes
The additional leave entitlement of four days can be replaced with a payment in lieu until April 1, 2009, but thereafter it cannot, except for in the circumstances of a termination of contract. It is, however, possible for employers to agree with employees that the additional leave entitlement may be carried forward into the next holiday year.

There is no requirement to increase holiday entitlement where workers are already entitled to at least 28 days’ holiday prior to October 1, 2007.

Employers can use the Department for Business Enterprise and Regulatory Reform (DBERR) ready reckoner to help them calculate an employee’s new holiday entitlement where the employer’s holiday year does not start on October 1. This can be found at www.dti.gov.uk/employment/holidays/page40455.html

Setting out holiday rights
An employer should set out in writing the arrangements relating to holiday when an employee starts work. The holiday arrangements are usually set out in a contract of employment or statement of terms and conditions of employment (which should be given to an employee within two months of them commencing work).

Details of the employer’s holiday year; the amount of holiday entitlement and the amount of holiday pay should be provided. Sufficient details should be supplied to enable an employee’s entitlement to be precisely calculated, including an employee’s entitlement to accrued holiday pay on termination of employment.

The holiday year
An employer can specify the dates of its holiday year. For example, it can be the calendar year, or it can run from say, April to March. If an employer does not state the holiday year, then an employee’s leave entitlement is calculated either from the date on which the employee started working for the employer, or for employees already employed on or before October 1998, from 1 October (being the anniversary of the Working Time Regulations that came into force on that date).

Bank holidays
Although the recent statutory changes to holiday entitlement are designed to allow employees to benefit from the eight bank holidays, there is no entitlement for taking holiday on these specific days. Depending on the nature of the work in question and any holiday rules that the employer might have put in place, an employee can be required to work on bank holidays.

Accumulating leave
In the first year of an employee’s employment, employers are entitled to use an accrual system whereby they total up how much leave an employee has built up during their first year of employment.

This leave is then built up monthly in advance at the rate of one twelfth of the annual entitlement. For instance, an employee in the eighth month of his employment would have built up 16 days’ leave, based on the annual entitlement of 24 days (24 x 8/12ths = 16).

When the holiday entitlement increases to 28 days on April 1, 2009, the employee will be entitled to 18.6 days’ leave in his eighth month.

Before October 1, 2007, employers were required to ‘round up’ fractional days that employees had built up. This occurred when an employee requested leave but had only built up 0.3 days for example. The employer would generally round this up to the nearest half-day.

There is no longer any requirement to do so and it is in the discretion of the employer whether they round fractions up or not.

Carrying over leave
From October 1, 2007, employees can carry over into the next holiday year any holiday entitlement over four weeks. However, there is no statutory entitlement for this; it must be agreed between the employer and employee. Until April 1, 2009, employers have the option to pay employees in lieu of the additional days. After April 1, 2009, employees cannot be paid in lieu for days not taken or carried over.

Applying for leave
Employees must give notice to their employers if they wish to take holiday. This notice must be twice as long as the period of leave requested. The employer can refuse permission by giving counter notice at least as long as the leave requested.

Restrictions on taking leave
Employers can, for example, elect to specify particular dates as days of closure when employees are expected to take annual leave; or they can determine the maximum amounts of leave that can be taken on any one occasion and when the leave may be taken.

Any such restrictions must either be expressly stated in the contract of employment; implied from custom and practice, or incorporated into individual contracts from a collective agreement between the employer and trade unions. Employers can also require employees to take single days as holiday and they can stipulate when leave can be taken provided that it is on a day that the employee is contracted to work.

Holiday Pay
If an employee’s salary does not vary with the amount of work done, then for each week of statutory leave entitlement, he is entitled to a week’s pay. Pay for non-contractual overtime is not included in this.

If an employee’s pay does vary with the amount of work done, then the amount of a week’s pay is the pay for the normal weekly working hours multiplied by the employee’s average hourly rate over the preceding 12 weeks. Overtime hours can be included in this although pay for these hours should be adjusted to the normal rate.

Any week in which no pay was due, for hours worked, should be replaced by the last previous week in which pay was received for hours worked. For shift workers their average weekly hours of work in the preceding 12 weeks, are multiplied by their average hourly rate which is calculated as above and can include any shift allowance which is payable.

No normal working hours
In these cases, a week’s pay is the average pay received over the preceding 12 weeks. And any week for which no pay was due should be replaced by the last previous week for which pay was due.

Part time employees
Part time employees are entitled to the same holidays as full timers, on a pro-rata basis. For instance, an employee who works three days a week is entitled to 14.4 days’ holiday per year.

No one has a statutory entitlement to paid leave for public holidays. It depends on what is stated in the contract of employment. Some employers may give part-time employees a pro-rata entitlement of days off in lieu according to the number of hours they work.

However, they are not under any obligation to do so.