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What are the basics of employee holidays?

All UK workers are entitled to at least 5.6 weeks’ paid holiday per year, inclusive of bank holidays. For full-time staff on a five-day week, this means 28 working days and, for part-time staff, this is calculated pro-rata. Staff working more than five days a week still only get 28 working days. It is good practice for employers to set out employees’ annual leave entitlement in an Annual leave policy.

This entitlement applies not only to employees but also to other staff who provide services personally to you unless they are in business on their own account. This means certain consultants or contractors must be given paid holiday.

Bank holidays

There is no legal requirement for staff to have time off on bank or public holidays or to receive extra pay for working those days. However, many employers offer this. 

For example, if a place of work is closed on bank holidays, the employer can make staff take these days as part of their annual leave entitlement. By doing so, the employee has no choice about taking a holiday on the bank holiday and can only choose when to take the remaining days. Record clearly what your workplace arrangements are for bank holidays in the Employment contract or Annual leave policy.

Requiring holiday to be taken

Employers can require workers to take their holiday on a certain date by giving twice as much notice as the amount of holiday required (eg two weeks’ notice of one week’s holiday) unless something different is stated in the contract. Except for on termination, employers cannot 'buy out' the right to holidays.

Holiday on termination of employment

When workers leave, you must pay them for accrued but untaken holidays in respect of the statutory minimum holiday requirement (ie 28 days). For any holiday above the statutory minimum and calculating the payment due for any unused holiday, you can set your own rules in the Employment contract or Annual leave policy.

For more information, read How to calculate holiday entitlement.

What should our documents say about holidays?

Your staff contracts and/or holiday statements should provide the basic information about the amount of holiday provided to your staff. However, you should also consider including:

  • the minimum notice that staff must give to take holiday

  • the maximum holiday that can be taken at one time

  • a requirement that staff use up their holiday in their notice period

  • the right to make a deduction from pay on termination of employment if the holiday has been taken in excess of the accrued amount

  • how payment in lieu of unused holiday will be calculated

  • what the rules are about carrying unused holiday forward from one year to the next

Tricky issues on holidays

Rolled-up holiday pay (ie where payment for holidays is included in the regular payment of wages rather than paid at the time holiday is taken) is not permitted. Payment must be made at the time that holiday is taken.

Accrual of holiday during sick leave is a highly complex issue. 

It is clear that holiday continues to accrue while employees are on sick leave. If employees have not been able to use their entitlement due to sickness, they must be allowed to carry forward accrued holiday to the subsequent holiday year (at least in respect of four weeks’ leave).

However, it is not clear when that carried-forward leave expires or if there is any limit on the amount that can accrue.  

Holiday also continues to accrue while an employee is on maternity leave or similar (eg shared parental leave) and must be permitted to be carried forward if it cannot be used during the leave year.

When employees who are on holiday become sick, the sick days cannot be counted as holidays so must be added back to their unused holiday entitlement, to be taken at a later date.

Creating an Annual leave policy can help employers to comply with the law on some of these issues by setting out a clear approach.

Employee holidays in Scotland

While in England and Wales, there are currently 8 bank holidays, there are 9 in Scotland. 

In England and Wales, bank holidays tend to be automatic public holidays (the majority of workers are given the day off and the day is generally observed as a holiday). However, this is not the case in Scotland. In Scotland, there is much less uniformity regarding which bank and local holidays are granted as paid leave to employees. As a result, Scottish employment contracts will usually provide a holiday entitlement of a mixture of bank and local holidays. Not everyone is entitled to paid leave on bank or public holidays.

Employee holidays for Coronavirus (COVID-19)

In light of the Coronavirus (COVID-19) pandemic, the government passed emergency legislation to protect workers from losing their statutory holiday entitlement under The Working Time (Coronavirus) (Amendment) Regulations 2020. This allowed workers to carry their holiday entitlement forward where it has not been reasonably practical to take it in the leave year which is relevant.

Where it has been impractical for a worker to take some of their holiday due to the pandemic, the holiday may be carried forward into the next 2 leave years. 

The Regulations allow employees and workers to carry over up to 4 weeks' statutory paid holiday into their next 2 holiday leave years, due to the effects of Coronavirus (COVID-19).

Reasons for this could include:

  • they were self-isolating or too sick to take holiday before the end of their leave year

  • they had to continue working and could not take paid holiday

  • they were on furlough and could not reasonably use all their holiday in the holiday year

When calculating how much holiday a worker can carry forward, employers must give workers the opportunity to take any leave that they cannot carry forward before the end of the leave year.

To find out more information on employee holidays due to coronavirus read the Government’s guidance.

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