The majority of workers, whether employed on a part time or full time basis, are entitled to holiday pay each year, including most agency and freelance workers, under the Working Time Regulations 1998 (amended in 2003), Employment Rights Act 1996 and the ACAS Codes of Practice.
How much holiday pay are you entitled to?
To calculate how much holiday pay your are entitled to under law and ACAS holiday pay guidance, you first need to be clear on your legal annual holiday entitlement and your working year.
Legal holiday entitlement
The legal minimum holiday entitlement for workers covered by the Working Time Regulations 1998 is 5.6 weeks’ paid leave per year.
This is a minimum, however, and an employer may offer more paid leave per year than this. Your individual annual leave should be stated in your employment contract.
The 5.6 weeks’ paid leave is for an entire year. If you work part-time, then you will be entitled to the related percentage of this 5.6 weeks. For example, if you work 1 day a week, you will be entitled to a fifth of the 5.6 weeks paid holiday (your working week of 1 day multiplied by 5.6 = 5.6 days paid holiday per year).
This pro-rata calculation may also be used where you enter employment part way through a working year, calculating your holiday entitlement for the remaining months of the working year.
So for instance, where your working year begins in January and ends in December but you begin employment in April, you will be entitled to three quarters of the annual holiday entitlement. In the following working year, however, you will be entitled to the entire annual holiday entitlement.
Your annual holiday entitlement may include paid public holidays, such as Christmas Day, but it is not a legal requirement that an employer provides paid public holidays. Your employer should outline your personal situation with regard to paid or unpaid public holidays in your employment contract.
Your working year is the period of 12 months during which you may take paid leave. It may not necessarily run from January to December. It may, for instance, begin in April and end in March.
The starting point of your working year should be outlined in your employment contract.
Calculating holiday pay
You should receive the same amount of pay during your holiday as you receive when you are at work. Your holiday pay rate should be equivalent to your ‘normal’ working pay rate so during a week’s holiday, you should be paid what you would have received if you were working for that week.
Secondly, holiday pay must be made at the time of the holiday and not delayed or accumulated. So for instance, where you are paid at the end of each month and you take a week’s holiday in June, you should receive your holiday pay as part of your June salary payment.
Finally, to arrive at your normal weekly rate of pay your usual working pattern must be taken into account:
- Where you work fixed hours, whether part or full time, and your pay is the same each week, your weekly holiday pay will be the same as your weekly work pay. If you earn £250 for a working week, you will be paid £250 for a week’s holiday.
- Where the hourly pay rate is fixed but the number of hours worked each week may vary, perhaps due to shift work, your holiday pay will equate to the average number of hours that you worked each week over the past 12 weeks. So for instance, if your average weekly number of hours worked over the last 12 weeks is 30 hours, this would be multiplied by your hourly pay rate to arrive at your week’s holiday pay.
- Where you do not work fixed hours, perhaps on a zero-hours contract, your weekly holiday pay rate will be the average you were paid over the last 12 paid weeks. So where you earned £60 in each of weeks 1 to 10 and £180 in each of weeks 11 and 12, your average will be £80. This will be your pay for a week’s holiday.
- Similarly, where your weekly pay varies due to commission, an average of the last 12 paid weeks will be taken into account to calculate an average weekly pay rate.
‘Carrying over’ leave
Should you reach the end of your working year and still have unpaid leave to take, it may be possible to carry this over to the next working year, as long as your employer agrees. Generally, the amount that can be carried over is up to 8 days but again, this is for your employer to decide on.
An employer may require some or all of their employees to use their paid annual leave on certain dates, for instance, where a factory shuts down for a period of time such as Christmas or a bank holiday.
Notice should always be given of these dates and often written into employment contracts.
Making a holiday request and your employer’s right to refusal
When you make a request to your employer for annual leave, you must give at least double the amount of notice as the time that you wish to take off. For example, where you wish to take a week’s paid holiday, you must make your request at least 2 weeks’ beforehand.
Your employer may deny your request for holiday where they have good reason, such as where the business would be understaffed. However, this refusal, and any later refusal, must be made by giving the same amount of notice as you have requested leave. For example, where you have requested a weeks’ holiday, your employer must give you at least 1 week’s notice of his refusal of your request.
What should you do if your employer does not meet your legal annual holiday and holiday pay entitlement?
Where you feel your employer’s actions are impinging on your rights as an employee with regard to annual paid leave, there are paths you may follow to put this right.
It could be that:
- your employer’s refusal of your holiday request is unreasonable
- you are not granted the legal minimum annual holiday entitlement as part of your employment conditions
- your employer seeks to provide you with holiday pay that is less than your working rate
- your holiday pay has been incorrectly calculated
- your employer changes your holiday entitlement without telling you
So what should you do?
Approach your employer
The first course of action is to raise the issue with your employer. Discuss your grievance with them. The situation may have arisen out of a misunderstanding, on either side, but even where this isn’t the case, it may be possible to come to an agreement at this stage.
Your employer’s grievance policy
Where talking to your employer has not resulted in resolution of the problem, read your employer’s grievance policy and follow the procedures in place.
At this stage, if the issue still has not been resolved, you may contact ACAS. They will approach your employer for ‘early conciliation’ which is a method of resolution that avoids the use of an employment tribunal.
The ACAS Code of Practice outlines how employers should handle grievance situations in the workplace, including the availability of employment tribunals to employees.
Where all attempts at resolution have failed, you may make a complaint through an employment tribunal. This must be within 3 months of the refusal of your holiday request or the holiday related issue arising.
Why take legal advice?
Where you find yourself in a dispute with your employer over holiday pay or entitlement, it is advised that you take legal advice, especially before entering into an employment tribunal.
Whatever stage you are at in your dispute, taking advantage of specialist legal advice can ensure that you are fully informed of your rights, are aware of whether your case is likely to succeed, and can avoid any unnecessary stress or expense.
Does an employer have to pay holiday pay?
Yes it is a fundamental right. The legal minimum holiday entitlement for workers covered by the Working Time Regulations 1998 is 5.6 weeks’ paid leave per year.
How is holiday pay calculated?
For each week of leave accrued workers are entitled to one week's pay. For workers on fixed hours and variable pay (e.g. bonus, commission), it equals the average hourly rate (over the preceding 12 weeks) multiplied by the normal working hours in a week.
Can your employer refuse to pay you holiday pay?
No - your employer has to pay you for any holiday you're legally entitled to. If you are owed holidays when you leave a job you are entitled to pay in lieu of holiday alternatively you could ask your employer if you can take the holiday as days off during your notice period.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.