3 things you need to know about holiday pay

3 things you need to know about holiday pay

You are entitled to statutory paid holiday if you are a ‘worker’ or an ‘employee’.

A worker is someone that generally works casually and decides whether to do the work offered by an employer. Whereas an employee is someone that works on a permanent basis and cannot refuse to work the hours and days agreed.

(1)  How much holiday pay are you entitled to receive?

Holiday pay is governed by the Working Time Regulations 1998 (WTR) or your employment contract.

The minimum amount of paid holiday you are entitled to receive is 5.6 weeks in each leave year (Statutory Entitlement). The Statutory Entitlement includes bank and public holidays, which is typically 8 in England and Wales.

Your entitlement to paid holidays could be higher than the Statutory Entitlement under your employment contract but will include your Statutory Entitlement.

The leave year is determined by your employer but typically this could be from 1 January to 31 December.

(2)  How do you calculate holiday pay?

A day’s holiday pay is worked out according to the kind of hours you work and how you are paid for the hours (eg full-time, part-time, term-time and casual hours).

The most commonly used day rate calculation method is 260 working days per year. This method is based on a standard 5-day working week. A day rate on this method is calculated by dividing your annual salary by 260. There are also 261 and 253 variations, which take into account leap years, and bank and public holidays respectively.

Another common method is 365 days per year. This day rate is calculated by dividing your annual salary by 365. There is also the 366 version for leap years.

Some employers may use the calendar day method. This is different from the previous methods, as the day rate may vary each period. To work out a day rate on the calendar method, your salary for the period is divided by the number of calendar days in the period. For monthly payrolls, this means the day rate will change depending on the number of days in that month.

If you work irregular hours, you will need to calculate your average hourly rate (including commission). You will then need to take the average rate over the last 52 weeks. If you have worked for less than 52 weeks, use the average pay rate for the full weeks you have worked.

Holiday pay should be paid for the time when annual leave is taken. An employer cannot include an amount for holiday pay in the hourly rate (known as ‘rolled-up holiday pay’).

You can use the holiday calculator to work out how much leave you should get click here.

(3)  Can you choose when to take your holiday?

Written rules

Your employer is allowed to make rules as to when holiday can and cannot be taken.

Your employer may have a policy that sets out how you request holidays and the rules around taking holidays or this may be set out in your employment contract. Alternatively, if your employer recognises a trade union, the rules might be set out in a collective agreement with them.

Your employer may also stipulate days when holiday must be taken (eg between Christmas and New Year as the business is closed).

No written rules

Where the rules for requesting holidays are not set out in a contract or collective agreement, the WTR provides what notice a worker must give.

You should request holiday by informing your employer which days you wish to take off. The number of days’ notice given by you must be at least twice the number of days holiday being requested (eg on Monday, you request to take Friday off as holiday. Therefore, you must give twice as much notice ie 2 days. The notice must be given before the holiday is due to be taken, so it must be given before Wednesday).

However, your employer can give notice to you refusing your request to take holiday. The notice your employer must give you is at least the same amount of notice as the number of days being refused (eg if you want to take 1 weeks’ holiday, you need to give 2 weeks’ notice, but you employer can refuse this by giving you at least 1 weeks’ notice).

Forced holiday

If your employer wants you to take holiday on a certain date, like workers requesting holiday, your employer must give your twice the amount of notice as the holiday requested (eg your employer decides to close for 2 weeks over the Christmas period. Therefore, your employer must give her at least 4 weeks’ notice prior to the proposed closure).

Comment

The government has launched a consultation on calculating holiday entitlement for part-year and irregular-hours workers to introduce a reference period to ensure that holiday entitlement and pay is directly proportionate to the time spent working. The consultation is a response to the Supreme Court decision in Harpur Trust v Brazel, which held that holiday entitlement under the WTR for permanent part-year workers should not be pro-rated to that of a full-time worker.