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Have yourself a very Happy Holiday

12 Jul 2011

Business-matters-600

Paid time off from work means different things to different people - a "dream" vacation for some, for others, the opportunity to catch up with friends, family or the gardening, says Gareth Edwards.

Whatever the plans, employees regard holiday to be the most significant employment benefit that they receive.

How many days?
All employees have an entitlement to paid holiday under the Working Time Regulations and in each leave year, they are entitled to take 5.6 weeks annual “statutory holiday”.

So for an employee working five days a week, this amounts to 28 days leave (five days in a working week x 5.6 weeks entitlement) irrespective of whether or not they are taken on the actual bank holidays.

There is no entitlement to the bank holidays, just the effect of the bank holidays. Indeed, an employer can insist that a bank holiday is a normal work day and keep the business open as usual. An employer can offer more as contractual leave.

Part time workers have their entitlement pro-rated. So someone working three days a week will receive 17 days – 3 days x 5.6 weeks.

The position for those who work irregular hours remains unclear, but the DirectGov website advises that 5.6 weeks holiday is equivalent to 12.07% of the hours worked. To calculate the holiday entitlement of a shift worker, the employer must calculate leave based on the average shifts worked during the 12 week period immediately prior to the requested leave period.

Are bank holidays included?
There is no statutory right to bank holidays. Look at the contract of employment. If it states that staff are entitled to "x days holiday plus bank holidays" then employees are contractually entitled to bank holidays. Otherwise they are entitled only to "statutory holiday".

Part time workers who have a contractual right to bank holidays have a right to a pro-rated equivalent of their full time colleagues. It does not matter that the part time worker does not normally work on the day on which the bank holiday falls

What bout holiday pay?
Employees are entitled to a week’s pay for each week of leave. For employees with normal regular hours of work this generally means their basic salary without any commission or bonus.

However, if the employee’s pay fluctuates week to week, holiday pay will be based on their average pay during their normal working hours over the previous 12 working weeks, including any "commission or similar payment which varies in amount". Overtime pay will only be included in the calculation where overtime is guaranteed.

If the employee works irregular hours, a week’s pay is simply calculated as an average of all the sums earned in the previous 12 working weeks including any overtime payments and commission.

Can we say when they take leave?
Under the WTR, an employee must give notice if they wish to take statutory holiday equal to at least twice the period of leave that they are requesting. An employer may object to the request for leave by giving a counter-notice.

This must be given at least as many calendar days before the proposed leave is due to commence as the number of days which the employer is refusing.

An employer may give notice ordering an employee to take statutory holiday on specified dates including on bank holidays. Such notice must be at least twice the length of the period of leave that the employee is being ordered to take.

Unused holiday?
Under the WTR unused statutory holiday expires at the end of the holiday year. An employee is generally not entitled to carry statutory holiday over or to be paid in lieu of unused statutory holiday.

Employers may agree that staff may carry over unused holiday into subsequent holiday years and may impose the condition that such holiday is used within a specific period.

On termination of employment, the employee is entitled to be paid in lieu of any untaken holiday entitlement.

Holidays and maternity leave?
Women on maternity leave continue to accrue holiday during their leave. So, a woman taking her full maternity leave entitlement of 52 weeks will accrue a full year’s holiday entitlement.

The employer has the option of requiring the employee to take the holiday she will accrue either before or after her period of maternity leave. The same principles apply to employees taking paternity leave and parental leave where the period of leave spans two holiday years and the employee therefore risks losing their holiday entitlement.

Sick leave and holidays?
An employee continues to accrue statutory holiday during sickness absence. This means that an employee who has exhausted their sick pay entitlement could request to take paid holiday during their sickness absence.

It’s generally agreed that employees who are not permitted to take their statutory holiday while they are on sick leave are allowed to carry holiday over to the next holiday year.

Sickness during a holiday?
The position is unclear. The European Court of Justice has held that an employee who is incapacitated during a period of previously scheduled statutory holiday should have the right to reschedule the holiday for a later date.

The Employment Tribunal agreed with this proposition. However, neither the ECJ nor the ET’s decision is definitive on this point. In the absence of clarity, an employer may wish to require that holiday will only be rescheduled where the employee has complied with its sickness absence procedures during their holiday period.

The company might include in its sickness absence procedure a requirement that in these circumstances the employee is required to provide a medical certificate confirming their illness.

Images for this article - click to enlarge

Gareth Edwards is a partner in the employment team at Veale Wasbrough Vizards

Unless otherwise stated, all images copyright © Mercator Media 2012. This does not exclude the owner's assertion of copyright over the material.



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