1 Feb 2009
Gillian Dowling
Job Title
AS SPRING APPROACHES, many of us are starting to think about the summer and our holidays. Just to remind employers, as you plan ahead, the statutory minimum holiday entitlement for workers increases to 28 days’ leave (including bank holidays) on April 1.
Over the past couple of years we have seen the statutory minimum holiday entitlement increase from four weeks’ paid holiday (20 days for someone on a five-day week) to 4.8 weeks (24 days for a five-day-a-week worker), and now the last increase to 5.6 weeks (that is, 24 days going up to 28 days) will be in April. This entitlement includes all bank/public holidays. The statutory leave will be capped at 28 days.
Employers who currently give their workers 20 days of holiday, plus eight bank holidays, will already have met the increased statutory minimum holiday entitlement.
These changes have caused quite a lot of confusion for employers in the past few months, so in this column we look at some of the principles set out in the Working Time Regulations (WTR) 1998, which set out the regulations on the statutory minimum holiday entitlement.
The regulations provide for paid holiday each year for all workers, not just employees. Part-time and even self-employed workers are covered if they undertake to perform work personally and the relationship is not genuinely one of a client or customer on the one part and a profession or business undertaking on the other.
Bank holidays can only be used to go towards the statutory minimum holiday entitlement if the workers are given paid time off work for the day. An employer relying on bank/public holidays to go towards the minimum entitlement of 28 days’ leave needs to ensure that if a worker works over a bank holiday, they have a paid day off in lieu.
The additional leave resulting from the recent increases (that is, four days at present rising to eight days from April) can be carried over from one year to the next if it is agreed in writing between the employer and worker in a legally enforceable agreement, such as a contract of employment or staff handbook.
An employer does not have to agree to a carry over of holiday, but some employers do. Carrying over a few spare days of leave from one annual leave year to the next is often seen as a benefit by workers, as it enables them to keep a few days spare for domestic or family emergencies. This can be a cost-effective way of offering an additional benefit for employees and it can also help employers too. On the other hand, it could involve more administration for employers.
Holiday pay is calculated on the basis of the worker’s normal hours of work. Where there are no normal hours of work or the rate of pay varies, holiday pay is calculated on the basis of the average pay received by the worker in the previous 12 weeks.
In general, there is no right to pay in lieu of the statutory minimum holiday entitlement during the course of the employment. However, to enable employers to manage the recent increase in holiday entitlement, employers may pay in lieu for the current four days of leave up to March 31.
Employers can pay in lieu of holiday on the termination of employment, where the worker has taken fewer annual leave days than he has accrued. This does not need to be rounded up. If a worker leaves, having taken more annual leave than accrued, an agreement in writing that is legally enforceable, such as a contract of employment or staff handbook, can provide for a deduction from pay in lieu of the excess holiday.
When calculating holiday pay on termination, those operating the payroll will need to be more cautious than before if the employer relies on bank holidays to make up the 28-day statutory minimum holiday entitlement under the WTR. When working out holiday pay on termination, it has previously been common to count only days that can be taken flexibly, but the bank holidays may now have to be taken into account too.
