The best laid holiday plans

01 December 2016, at 12:00am

Adam Bernstein presents some expert advice on the often-tricky subject of holiday leave entitlements for employees, and how to handle requests for time off.

EMPLOYEES AND WORKERS REGULARLY rank their entitlement to annual leave as one of the most important benefits they receive from their employer. 

Many spend a significant amount of time planning what they will do during their annual leave – whether that involves taking time off for a honeymoon, or just time spent with friends and family. From an employer’s perspective, however, dealing with an employee’s right to annual leave can cause problems.

There are a number of issues, often of a technical nature for employers to be aware of, and this is an area of employment law that is subject to regular change.

Employees are entitled to 5.6 weeks’ annual leave per year which amounts to 28 days per year for those who work five days a week, says Mark Stevens, a solicitor at Veale Wasbrough Vizards. 

“A part-time worker is also entitled to 28 days’ holiday per year, but reduced pro rata according to the number of days they work each week.”

He illustrates this with an example where someone working three days a week will receive three-fifths of 5.6 weeks’ leave, which works out as 17 days. Interestingly, public holidays can count towards the worker’s entitlement to annual leave. 

Calculating the holiday entitlement of a shift worker is more difficult, says Stevens. Here, an employer must calculate leave based on the average shifts worked during the 12-week period immediately prior to the requested leave period.

To use an example, if an employee always works four 12-hour shifts, followed by four days off, then their average working week over that 12- week period works out as three-and-a- half shifts of 12 hours. So 5.6 weeks x 3.5 shifts means a shift worker would be entitled to 19.6 shifts’ annual leave for the holiday year, with each shift being 12 hours.

The law only sets the minimum and so an employer is free to offer more than statutory holiday and the extra holiday will be considered “contractual holiday entitlement”.

Bank and public holidays

Contrary to popular myth, there is no statutory right to bank or public holidays. This is why, practically speaking when looking at this question, Stevens says the first thing to consider is the contract of employment: 

“If, for instance, the contract says staff are entitled to ‘28 days’ holiday plus bank or public holidays’ then employees are contractually entitled to take bank or public holidays off.”

In contrast, if the employee does not have a written contract, or their contract states that the employee is entitled only to “statutory holiday” then, says Stevens, the employee has no express legal right to bank or public holidays.

He adds: “If an employee wishes to take leave on a bank or public holiday it will be a matter for discussion with the employer, as they would for any other request for leave on any other day of the year.”

Of course there is still a risk that employees may gain the right to bank or public holidays if the business always allows them to take this time off.

Parity with full-time workers extends to part-timers in terms of contractual rights to bank or public holidays as they 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 or public holiday falls,” Stevens says. “So, an employee who works Tuesday, Wednesday, Thursday will be entitled to three- fifths of the annual bank or public holidays occurring that year, even though they never actually work on a Monday or Friday.”

How much pay?

Getting down to the nuts and bolts of pay, the law says employees are entitled to a week’s pay for each week of annual leave. Stevens states that for employees with normal, regular hours of work this generally means their basic salary without any bonus or irregular payments taken into account.

Again, calculating a week’s pay becomes more complicated where an employee’s pay fluctuates week to week due to the amount of work done in their hours of work (where pay is linked to productivity) or the time the work is carried out (i.e. where the employee’s pay is linked to a shift pattern which varies week to week). 

In these circumstances holiday pay will be based on their average pay during those normal working hours over the previous 12 working weeks.

Other rights

The European Court of Justice (ECJ) recently found that a salesman paid partly by regular salary and partly by commission should be paid holiday pay that includes commission.

In addition, an Employment Appeal Tribunal found that guaranteed overtime payments should also be taken into account when calculating holiday pay.

When the right to annual leave was first introduced, casual workers with irregular working patterns were often given “rolled up holiday pay” (with their holiday pay included within their regular wages payments) by their employers in order to try to avoid paying an employee while they were not in work. 

The ECJ, as Stevens points out, ruled that rolled up holiday pay is unlawful as it means a worker receives no pay while they are actually on holiday.

Handling holiday requests

Making holiday requests is one thing, but getting permission can be another. Says Stevens: “Where an employee wants to take holiday at an inconvenient time, an employer can serve a counter-notice on an employee to state that their holiday request cannot be accommodated.”

Here the counter notice must be given at least as many calendar days before the requested leave as the number of days which the employer is refusing.

Stevens says it’s also possible for employers to give notice ordering an employee to use their statutory holiday on specified dates. But as with normal holiday request refusals, this notice must be at least twice the length of the period of leave that the employee is being ordered to take.

Unused holiday

The subject of what to do with unused holiday often arises and the default position set by the law is that unused statutory holiday expires at the end of the holiday year. 

 “This means an employee is not entitled to carry statutory holiday over or to be paid in lieu of unused statutory holiday,” says Stevens. “Although there are exceptions.” In practice he sees employers sometimes agreeing that staff may carry over unused holiday into subsequent holiday years.

In general, the only time employees should be paid for their annual leave is on the termination of their employment.

So as is clear, the law on holiday entitlements is quite complex. Employers in any doubt should seek advice – employees will if they feel the need. 

Special cases

  • Maternity leave Women on maternity leave continue to accrue holiday during their leave. A woman taking her full maternity leave entitlement of 52 weeks will accrue a full year’s holiday entitlement.
  • Sick leave An employee continues to accrue statutory holiday during sickness absence, even if they are absent for the whole holiday year. This means that an employee who has exhausted their sick pay entitlement could request to take paid holiday during their sickness absence.
  • Sickness during annual leave The ECJ has previously held that a worker who becomes un t for work during a period of their statutory leave must be entitled to reschedule the period of their planned leave that coincided with the period of their sickness.